# Why aren't we trading in the US?



## yonnie (3 June 2007)

Alright, at the moment the Ozzie share market is going very well, but what do you trade when there`s not much going left????????   Just waiting a few years weathering the storm?

Wouldn`t we better off to consider opening an US broking account and the world will be your oyster?

With an US account like Interactive Brokers you can:

trade more than ten thousand US companies
trade markets in Europe, Japan, Britain etc
trade 100s of different futures contracts
trade 100s of exchange traded funds
etc etc

lots of free info and market screeners
low brokerage (Ozzie is a joke; at IB I can buy $ 100,000
worth of shares for $ 1; Choicetrade $ 5 per unlimited trade)
platforms in Oz are a joke too: with IB I can place more than 30 different order types and you dont pay any extra like Comsec/Westpac....set and go fishing
deposits in broking accounts are insured in case your broker goes belly up; not in Oz

the only thing I dont like is that the leverage on shares in the US is not great, while here in Oz you can use CFD`s.

Traded there myself for years, came back here last year, but might go back again.


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## reece55 (3 June 2007)

yonnie said:


> the only thing I dont like is that the leverage on shares in the US is not great, while here in Oz you can use CFD`s.




I'm with you yonnie, already there having fun in yankee land......

I trade through the IG Markets platform, I can get 20:1 leverage at a commission cost of 2 cents per share, $15 min, so it is advisable trade higher priced shares, but all the same anything over about a $10 is going to be a hell of a lot cheaper than ASX traded stocks...... The world is your oyster, plus now I can trade in my own home, away from the distractions of work to my hearts delight. Be warned however - insomnia can be an issue!!!

Cheers
Reece


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## yonnie (3 June 2007)

hi reece,

Insomnia was not a problem for me, `cos I traded on EOD data........did my research during the day, place my orders:
buy limit or buy stop with stop loss and trailing stop and off to bed.

I miss to be able to place 1 complete order.


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## ta2693 (3 June 2007)

As far as I know, when you use limit order in Nasdaq, you can also get credit for trading. In some case, the credit you get is more than your SEC fee and brokerage fee.  
But I am afraid there are too many players in us Market, the market is too efficient to make profit out of it. Besides, There is no American Stock forum out there.


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## ta2693 (3 June 2007)

yonnie said:


> Alright, at the moment the Ozzie share market is going very well, but what do you trade when there`s not much going left????????   Just waiting a few years weathering the storm?
> 
> Wouldn`t we better off to consider opening an US broking account and the world will be your oyster?
> 
> ...




Where do you get $1 brokerage fee? I remember the lowest it is around $8


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## nizar (3 June 2007)

yonnie said:


> Alright, at the moment the Ozzie share market is going very well, but what do you trade when there`s not much going left????????   Just waiting a few years weathering the storm?
> 
> Wouldn`t we better off to consider opening an US broking account and the world will be your oyster?
> 
> ...





I tend to agree.

What i like about the Yanks is that you can easily short stocks, unleveraged. Just as easy as you can buy them.

Couple easy shorting + cheap brokerage and you cant go wrong.

Much bigger universe of stocks as well.


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## yonnie (3 June 2007)

ta2693 said:


> As far as I know, when you use limit order in Nasdaq, you can also get credit for trading. In some case, the credit you get is more than your SEC fee and brokerage fee.
> But I am afraid there are too many players in us Market, the market is too efficient to make profit out of it. Besides, There is no American Stock forum out there.





sorry ta, but I think its a bit of a laugh to say that the US market is more efficient; if anything the moves are more exaggerated than in Oz.

No American Stock forum: what about elitetrader.com, trade2win.com and hundreds of others

I know you get some credits if you add liquidity to the market, but not sure how that works.

IB charges  ½cent per share, so ie for a $ 50 share you buy 200 shares @ $ 50 = $ 100,000 position for $ 1.

For low value stocks you can open an account with Choicetrade and they charge $ 5 per order.

so there you go, no reason not to go there


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## reece55 (3 June 2007)

I am with yonnie.
Granted, you have to watch out for the volatility, but too efficient to make a profit???? What about trend trading - just have a look at the bull run in Apple (NASDAQ:AAPL). You didn't have to be a genius to understand these guys command the most sought after piece of hardware in the world and that with emerging countries expanding, don't you think they are going to sell a bundle of these to Chindia......... There are countless others, my point is that the US simply provides more choice - a successful trader should be able to make a buck with the Yanks....

Cheers


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## ta2693 (3 June 2007)

Another problem is the time zone, you have to stay up very late to trade in US. It is very bad for your health.


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## Kauri (3 June 2007)

I personally have more on my plate than I can handle already with IG's Aussie CFD offerings, FX, indicies and a few commodities.


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## ta2693 (3 June 2007)

I know there is a company called swifttrade who is recruiting trader to trade for them on US market including NYSE and Nasdaq. They are doing day trading, i.e. the position have to be zero overnight. 
You do not have to use your money. they give you around 30000 at the beginning to 2m if you are really good. 
You will get 10% of the profit you made. every day they allow you to have $100  lose, If you lose more than that, you are shut down in a day. if you continue make lose, they will kick you out. The good thing is you do not need to use your own money, the bad thing is you can not make much out of 10% profit in day trading and you may have to stay up very late because of time zone. 
Swifttrade has lot of branch over the world , if you are interested in it, you can check www.swifttrade.com.


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## ta2693 (3 June 2007)

One more question about Tax issue. What is tax treatment of my earning from US market?
Do I need to pay double income tax to UTO and ATO? What should I do If I do not have a Tax Number in US? Do I have to pay on the highest marginal tax rate like what happened in Australia?


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## yonnie (3 June 2007)

ta2693 said:


> One more question about Tax issue. What is tax treatment of my earning from US market?
> Do I need to pay double income tax to UTO and ATO? What should I do If I do not have a Tax Number in US? Do I have to pay on the highest marginal tax rate like what happened in Australia?




ta, if you`re a Aussie resident nothing changes. US/Oz has a tax agreement and when you open a brokerage account in US you sign a W8 form and you`re exempt from US tax.
You just fill in your tax form in Oz how u would do normally, but you have to "bring back" your profits in AUD on your tax form.


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## yonnie (3 June 2007)

Kauri said:


> I personally have more on my plate than I can handle already with IG's Aussie CFD offerings, FX, indicies and a few commodities.




brokerage/interest will be cheaper in US

you can even open a broking account in AUD with IB
so trade the SPI with IB in AUD

they will also converse money form AUD to USD and back for you at a very decent rate.
better than the banks.


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## grumpee boi (3 June 2007)

I agree yonnie.  I am looking at a timing system for ETFs on the IB platform.  There are ETFs covering everything from commodities to even listed equity over there now and it is easy to construct a worldwide diversified portfolio.  Timing the different asset classes will reduce returns in a bull market but dramatically reduce volatility and drawdowns.  

I have written about a simple ETF portfolio before but since then there are new ETFs that could be added for further diversification - esp the commodities like gold and oil, cheaper EAFE-type funds and BRICs (Brazil, Russia, India and China emerging markets).  For DIY investors, cutting out the extra layer of fees associated with planners and wrap platforms here in Oz without losing the benefits of true worldwide diversification is such an opportunity.  You could easily save 1-2% pa and we all know what that could add up to over a couple of decades.  

Just need to get some data for the chosen ETFs and work out whether I want to hedge currency risk and to what extent.

Adam


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## yonnie (3 June 2007)

grumpee boi said:


> I agree yonnie.  I am looking at a timing system for ETFs on the IB platform.  There are ETFs covering everything from commodities to even listed equity over there now and it is easy to construct a worldwide diversified portfolio.  Timing the different asset classes will reduce returns in a bull market but dramatically reduce volatility and drawdowns.
> 
> *was looking at a timing system myself at one stage for the country ETF`s, but I find that damned difficult.
> One month Malaysia is ahead, stops, starts, spurts, another month Taiwan is king and all the time I`m jumping in and out and getting nowhere.
> ...


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## BREND (3 June 2007)

Just bought some ITM US stocks Call options last Friday night:

CAT Jul 75 Call @ $5.00
ESV Jul 60 Call @ $3.80
FCX Jul 75 Call @ $6.60
FTI Jul 75 Call @ $3.90
HOC Jul 70 Call @ $71.19
PCU Jul 90 Call @ $5.20

In my view, the oil rigs sector is now one of the most undervalued sector in US market. 

US market is an easy market to make money, not because this market is inefficient, but it is because a lot of information about the companies are freely available in the internet. 

I had participated in US stock-pick competition organised by Zacks.com, currently my ranking is 198th out of 46,728 participants.

I'm resident in the other part of the world, yet my portfolio return is far better than the average American investors there.


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## yonnie (3 June 2007)

so now I`m putting together a long-term (even years) trend following strategy in big markets with maximum leverage.

Markets considered:

1. so no individual stocks, but markets like futures on S&P500 (the SPI is not very liquid)

2. currency futures: just the main ones like EU/USD

3. futures on commodities: individual commodities are too volatile, so I would go for for instance the DJ AIG Commodity Index that consists of 19 physical commodities or any other
simular index with more than 1 commodity.

4. property: futures do exist over housing in Chicago etc. believe it or not, but I would want futures over US housing in general

5. anything else out there? (please dont say cash)

Maximum leverage:
I like the leverage of cfd`s, but not with the cfd provider at the other end of the contract.
Options are often not very liquid. 
So futures.


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## doctorj (3 June 2007)

BREND said:


> In my view, the oil rigs sector is now one of the most undervalued sector in US market.



I can't say I know much about the companies that own these rigs but it seem the rig market isn't as tight as it was, say 6-12 months ago and I've noticed rates coming off the boil too.


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## yonnie (3 June 2007)

doctorj said:


> I can't say I know much about the companies that own these rigs but it seem the rig market isn't as tight as it was, say 6-12 months ago and I've noticed rates coming off the boil too.




so what is it: more rigs or less drilling?


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## doctorj (3 June 2007)

Good question - can't say I have the foggiest, but I'm in inclined to think it's a little of both


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## BREND (4 June 2007)

doctorj said:


> I can't say I know much about the companies that own these rigs but it seem the rig market isn't as tight as it was, say 6-12 months ago and I've noticed rates coming off the boil too.




If you look into the order book of RIG and GSF, their order book lines up to 2009. Assuming that their order books are filled eventually, their PEs are too cheap now.


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## wayneL (4 June 2007)

BREND said:


> If you look into the order book of RIG and GSF, their order book lines up to 2009. Assuming that their order books are filled eventually, their PEs are too cheap now.



I think folks have forgotten what cheap PEs are.... or never experienced them yet because they are too young. Come back and tell me they're cheap when they're <10.


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## It's Snake Pliskin (4 June 2007)

wayneL said:


> I think folks have forgotten what cheap PEs are.... or never experienced them yet because they are too young. Come back and tell me they're cheap when they're <10.




Low PEs


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## BREND (4 June 2007)

wayneL said:


> I think folks have forgotten what cheap PEs are.... or never experienced them yet because they are too young. Come back and tell me they're cheap when they're <10.




Ok, I should say PE is cheap relative to their growth rate.


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## wayneL (4 June 2007)

BREND said:


> Ok, I should say PE is cheap relative to their growth rate.





> PE Growth (PEG) Factor
> The PEG Factor, is the price-earnings (PE) ratio divided by the earnings per share (EPS) growth rate. The PEG factor measures the relative cost of earnings growth at the previous day's closing share price. The formula is the following:
> 
> = PE ratio / EPS Growth Rate
> ...



RIG is ~0.4. It is a well known, highly analyzed and much traded stock. Does this tell us anything with regards to the statement in bold? I don't know, just putting the question out there.

Lots of momo in the price action... but so has everything.


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## BREND (4 June 2007)

wayneL said:


> RIG is ~0.4. It is a well known, highly analyzed and much traded stock. Does this tell us anything with regards to the statement in bold? I don't know, just putting the question out there.
> 
> Lots of momo in the price action... but so has everything.




In my view, market didn't expect much from this stock. This is a wrong perception, check out the order book, all the way till 2009. Just in the case of resources sector, many mining stocks are still trading at low P/Es compared to their growth rate, to me market is wrong again. 

My investment style is to tap on market mistake, and ride on profit. Rather than to buy into high PE stocks and expect the expensive stocks going to become more expensive. This method has provided me with 28% year-to-date return from US market.


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## yonnie (16 June 2007)

decided to stay in Oz for the moment while the going is good and bugger off to the US when it stops.
Not going to wait 2 years here for the market to go back up again


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## theasxgorilla (16 June 2007)

yonnie said:


> Alright, at the moment the Ozzie share market is going very well, but what do you trade when there`s not much going left????????   Just waiting a few years weathering the storm?
> 
> Wouldn`t we better off to consider opening an US broking account and the world will be your oyster?




How do you deal with the currency exposure?

If I was a European and I took my Euro-denominated capital and put it into the S&P500, 3 years later (today), when I liquidated and bought new Euros I'd have made a whopping 5.5% p.a.  Hmmm...


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## reece55 (16 June 2007)

theasxgorilla said:


> How do you deal with the currency exposure?
> 
> If I was a European and I took my Euro-denominated capital and put it into the S&P500, 3 years later (today), when I liquidated and bought new Euros I'd have made a whopping 5.5% p.a.  Hmmm...




ASXG
One way you could hedge the currency risk out would be to buy the AUD/USD pair - the IG mini has a 2 pip spread with 10,000 USD per parcel (and you can buy a decimal portion, as long as it's above 1 contract). So, not only here would you hedge out your risk, you would be getting paid interest on the amount. 

Cheers


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## wayneL (16 June 2007)

theasxgorilla said:


> How do you deal with the currency exposure?
> 
> If I was a European and I took my Euro-denominated capital and put it into the S&P500, 3 years later (today), when I liquidated and bought new Euros I'd have made a whopping 5.5% p.a.  Hmmm...



Let's say buy AUD$100k's worth of US stock. Simply purhase back your AUDs via forex or futures. Same applies for any other currency.

This will effectively keep the US holding AUD denominated.

Alternatively, if you buy the SP via futures, only your margin is ever  exposed to currency fluctuations.

<edit> Reece, I was still typing mine while you posted yours.


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## yonnie (17 June 2007)

With a broker like IB you can have your deposits in different currencies: AUD, Euro, USD, GBP and probably a couple of others so that might help.

Also I wouldnt put that money there for a short period like 3 years.

Ok the USD is going down, but we will see what the AUD/USD cross rate is in a couple of years time when the commodities run out of steam


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## theasxgorilla (17 June 2007)

wayneL said:


> Let's say buy AUD$100k's worth of US stock. Simply purhase back your AUDs via forex or futures. Same applies for any other currency.
> 
> This will effectively keep the US holding AUD denominated.
> 
> ...




Reece/Wayne...

Okay, so if I wanted to typically hold a position for 12 months in another currency...what is the *best* way to hedge?  Best being defined as transaction cost and time flexible ie. can I pay one low price to hedge and remain covered for the duration of the trade and as long as it takes me to repatriate my funds...even if that happens to be an unknowable length of time.


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## wayneL (17 June 2007)

theasxgorilla said:


> Reece/Wayne...
> 
> Okay, so if I wanted to typically hold a position for 12 months in another currency...what is the *best* way to hedge?  Best being defined as transaction cost and time flexible ie. can I pay one low price to hedge and remain covered for the duration of the trade and as long as it takes me to repatriate my funds...even if that happens to be an unknowable length of time.



For margin reasons, it's best to have the hedging instrument and the assets in the one account. IB is ideal for this as you can trade the stocks, forex, currency futures and futures options from one single account. For set and forget, forex is probably best as there is no contract expiries to worry about, however you will presumably incur interest charges (I don't know because I don't trade the forex)

I prefer currency futures and options, but I am more active in my hedging strategy.

FWIW


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## theasxgorilla (17 June 2007)

wayneL said:


> IB is ideal for this as you can trade the stocks, forex, currency futures and futures options from one single account.




I feel suitably ignorant...reading www.interactivebrokers.com as I type this...is that the IB being referred to here?


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## lesm (17 June 2007)

theasxgorilla said:


> I feel suitably ignorant...reading www.interactivebrokers.com as I type this...is that the IB being referred to here?




Yes


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## niknah (19 June 2007)

I've been wanting to transfer moneys across to the US ever since the AUD hit >80c

With IB you've got to trade a certain minimum every month or they charge you fees, not good if you buy and hold.
Recently I opened up an account with www.zecco.com(free trades), the setup was confusing but after I got online everything's been ok.


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