Day trading dreams

[wayneL]

TAX

Never seen this discussed.

I'm surprised that full time traders don't talk at length about this scourge!

If they're making as much as some claim (appear) to be they would realise its something that cannot be ignored for any day trader! I don't trade full time but my Tax bill from trading really really "P"s me off!

You want to make $100K then you'll need to make $200K
You'll need to be twice as good as you think you'll need to be.

Notwithstanding TH's points, any business/profession has to pay tax. What's the difference?

If you want to earn $100k as a plumber or running earthmoving equipment or giving dodgy financial advice, you have to make $200k as well.

 

[tech/a]

I understand your arguement.
But I keep coming back to how many millions do you need/want.
Seriously if you cant privately trade enough size to live like a king and have to seek outside financing???---just dont get it.

Walk into a bank borrow at 7% make 20%/60%--no brainer.
Even the interest is tax deductable.
Indexes and Futs are massively leveraged.

Banks wont give a rats if you drawdown 23% if you keep up your payments but your idea dies at 20% with investors. Plus a heap of agro from the guy who's lost $400k on his $2 mill investment.

But hey everyone has an agenda.

 

[Trembling Hand]

just dont get it.

But hey everyone has an agenda.

Yes they do. You just have to look at the "5 trading rules thread"

 

[Aussiest]

I think what an experienced trader considers "regular income" is a million miles away from what a wage slave considers "regular income". Thus the reason why Nick Radge recommends 3 X wage before giving up the day job.

What do you mean here T/H? Do you mean Nick says to be able to earn 3 x your normal wage before giving up job? Eg, if i earned 60k, i would be aiming at 180k per year from trading?

Why wouldn't 2 x wage suffice? I don't see how trading expenses could equate to 1 x wage per year...

Internet connection: $600 p/yr
Computer maintenance, upgrades etc. $1000 p/yr (estimated)
Utilities: $1000 p/yr
Data & Software: $2000 p/yr
Trading fees (okay, here's the killer): $20-25k p/yr
Interest on margin loan: ? (if you use it)

If you stay within the 30-40% tax bracket, you could do it on 2 x wage per year.

Still a BIG ask though..

 

[Trembling Hand]

What do you mean here T/H? Do you mean Nick says to be able to earn 3 x your normal wage before giving up job? Eg, if i earned 60k, i would be aiming at 180k per year from trading?

Why wouldn't 2 x wage suffice? I don't see how trading expenses could equate to 1 x wage per year...

2 x wage is just not good enough. Earnings are lumby, edges disappear over night. Markets lock up and stop for months at a time. Not uncommon to earn nothing for a month. Add to that the drag on capital and position size each time you do the groceries, pay the rent, pay your tax etc.

Only someone who hasn't been in biz would confuse revenue with profit.

 

[Aussiest]

2 x wage is just not good enough. Earnings are lumby, edges disappear over night. Markets lock up and stop for months at a time. Not uncommon to earn nothing for a month. Add to that the drag on capital and position size each time you do the groceries, pay the rent, pay your tax etc.

Only someone who hasn't been in biz would confuse revenue with profit.

I sort of see what you are saying, that extra wage for downtimes etc. I'm not confusing revenue with profit, however, i forgot about downtime.

 

[nunthewiser]

Yes they do. You just have to look at the "5 trading rules thread"

can you elaborate here ?

is a sincere question as i have my own thoughts on the matter

 

[Trembling Hand]

I sort of see what you are saying, that extra wage for downtimes etc. I'm not confusing revenue with profit, however, i forgot about downtime.

Aussiest here is a perfect example. Last calendar year I had a year that I will never repeat on the SPI. The average points per contract I pulled I will never ever repeat, ever!!

Truly the best of times, Since March this year on the SPI my edge has all but disappeared. Its completely locked up and I'm not alone. I know many of the locals that have been at it for a long time have had to move to other markets.

You spend 3 months hoping your edge returns then realize that its gone - move to other markets, reduce size, readjust. Build up again. This is a something that stays constant - change.

Fight that on 2 x wage and you are doomed.

 

[ajjack]

Exactly my point TH.

Its the consistancy , of the trading thats the problem

Day trading is not like the salary job. There is no paid
holidays and sick leave etc.
To consistently make 2K /wk, year after year is a damn BIG ask!

Meanwhile, the expenses just keep coming.

No guys ... stay in your salary job.

 

[Trembling Hand]

http://traderfeed.blogspot.com/2009/08/challenging-economics-of-trading-for.html

If anyone cares

 

[trainspotter]

Notwithstanding TH's points, any business/profession has to pay tax. What's the difference?

If you want to earn $100k as a plumber or running earthmoving equipment or giving dodgy financial advice, you have to make $200k as well.

Get a better accountant, setup a company behind a unit or family trust (or is it the other way round?) I dunno ... get some serious tax advice from a CPA and be prepared to pay for it. If you are making the money you should be paying tax. Not real keen on giving my hard earned away to the existing Govt at the moment. Like Kerry Packer said "I can tell you you're not spending it that well that we should be donating extra !" to the ATO.

 

[Mr J]

You want to make $100K then you'll need to make $200K
You'll need to be twice as good as you think you'll need to be.

We would pocket about $130k, without any deductions, of which there are many for a trader.

Yes they do. You just have to look at the "5 trading rules thread"

What's my agenda in it TH? I'm pretty sure I'm in the discussion for the interest of discussion.

 

[airpoe]

I think most would like to not work & trade for a living.

You should aim to have $300,000 capital & working part-time (20 hrs).

So you would at least get $400 a week for working, that would pay for your daily expenses. The 300k can be used to trade shares but also kept in an online savings accounts that will pay say 5% (now its 4% but last yr was 8%) interest when markets are in freefall & trading is not a option

you don't have to wait 8 years to build up your capital to start to trade. Start buying asx200 companies, use $1000 to $5000 to buy companies you like.

Its better to start small & see how you go, there is not a better way to learn!!

I was a novice when I started trading in Feb 09 & lost 10k in 1 month, but luckily markets have been good since then & I have made back my 10k, then plus over $60k using my base of $165k. I'm hoping this is my one in a life time opportunity to make big bucks which is one in a life time opportunity.

i'm aiming to work part time in 5 years time when i'm 32, saved up $400k; use it to buy an apartment in the Sydney CBD & rent it out & to trade regularly but to have a max of 80k in the market. And enjoy watching the Swans @ the scg

 

[Mr J]

You should aim to have $300,000 capital & working part-time (20 hrs).

A comfortable figure completely depends on his personal circumstances. What are his expenses? Does he have a family to support? What kind of return can he generate? What kind of fluctuation in capital is he willing to put up with? Can his strategies adapt to different market conditions or different markets? He may only need a fraction of $300k, or he may need many times that.

I was a novice when I started trading in Feb 09 & lost 10k in 1 month, but luckily markets have been good since then & I have made back my 10k, then plus over $60k using my base of $165k. I'm hoping this is my one in a life time opportunity to make big bucks which is one in a life time opportunity.

They sound like the results of someone that bought sometime in Feb and has held since. Have you actually been trading, or did you buy and get lucky?

i'm aiming to work part time in 5 years time when i'm 32, saved up $400k

Does that include what you have now, and will you spend any of your trading profit. I.e. do you plan to do better than 225k->400k in 5 years?

but to have a max of 80k in the market.

So you make longterm trades?

 

[airpoe]

A comfortable figure completely depends on his personal circumstances. What are his expenses? Does he have a family to support? What kind of return can he generate? What kind of fluctuation in capital is he willing to put up with? Can his strategies adapt to different market conditions or different markets? He may only need a fraction of $300k, or he may need many times that.

this is for me

They sound like the results of someone that bought sometime in Feb and has held since. Have you actually been trading, or did you buy and get lucky?

I have made over 60 trades since feb, but lately have made minimal trades since the market is surging!! trading is also about luck

Does that include what you have now, and will you spend any of your trading profit. I.e. do you plan to do better than 225k->400k in 5 years?

still have 100k savings, would only expect 10% per year profit which includes dividends

So you make longterm trades?

both long & short term