Short term traders should be taxed at 90%

wayneL · 24 February 2010

The implication is that short term traders control the price of the share. If this is true then they are responsible for shares going up way beyond their true value as well. Roundabouts and Swings?

Short term traders may have some influence on the "noise" and/or on microcaps, but in the big picture are totally meaningless. Big price moves in established healthy companies have nothing whatsoever to do with short term traders. They will hitch a ride, but it is "investors" and institutional buying and selling that move prices on the grand scale.

OP is just chucking his toys out of the pram.

Mofra · 24 February 2010

I rarely trade what others would describe as short-term - I'm very thankful for there being ST traders though due to all the liquidity they provide the market. Don't agree with the OP at all.

Trembling Hand · 24 February 2010

Mofra said:
I rarely trade what others would describe as short-term - I'm very thankful for there being ST traders though due to all the liquidity they provide the market. Don't agree with the OP at all.

Mofra but do you consider your trades (long term) are fundamentally different to mine (short term)?

I always find it .......... amazing, weird,... arrogant? that long term traders consider themselves doing something different to short term'ers.

Temjin · 24 February 2010

So if I operate a perfectly legitimate business and decide to "hedge" my production in the short term by buying/selling a particular future/ETFs, I have to be penalized for doing so? Great!

Maybe ban legitimate hedging all the together, even though it has been a standard, perfectly ethical/moral, legal practice for the last few hundred years.

Mr J · 24 February 2010

Us shorterm traders are evil speculators TH. We make crazy markets, destroy companies, and cheat mums and dads out of their hard earned investment cash .

This isn't directed at you Mofra.

nunthewiser · 24 February 2010

Um............. Seeing as we "short term traders" provide such a boost to others pockets and incomes ........ Perhaps we shouldnt be taxed at all ?

Mr J · 24 February 2010

nunthewiser said:
Um............. Seeing as we "short term traders" provide such a boost to others pockets and incomes ........ Perhaps we shouldnt be taxed at all ?

If we're going to be called gamblers, maybe we should be taxed like gamblers, i.e. zero.

nunthewiser · 24 February 2010

Mr J said:
If we're going to be called gamblers, maybe we should be taxed like gamblers, i.e. zero.

LOL call me what ya want if it means not paying tax

ThingyMajiggy · 24 February 2010

CFDs are void of tax aren't they?

nunthewiser · 24 February 2010

ThingyMajiggy said:
CFDs are void of tax aren't they?

Not according to MY accountant .BUT i dont purely trade CFD,s alone .. i trade actual stock too . all goes in the income/loss basket at end of year . i could be wrong and need to have it separated ........and fire my accountant

Trembling Hand · 24 February 2010

ThingyMajiggy said:
CFDs are void of tax aren't they?

Yes thats right IF you are a loser. The Tax man has a ruling that he can call your activities "gambling in nature" and therefore not able to offset the losses against income.

BUT if you are profitable in the same nature & activities that they call a loser a gamble you classified as "carry on a business". Howz that for setting rules to suit your desired out come?

RamonR · 24 February 2010

Re: Short-term trading strategy discussion

Spiderbrain said:
I admit I don't know jack about much of but it just seems completely wrong for people to be simply gambling on the market on a daily basis like a poker player in the hope of outsmarting others who buy shares in a company because they are told it's a good investment. From the little I do know the whole market looks more like insanity to me than a way to run an economy!

When I buy a share I don't hope that I am outsmarting anybody else.
I hope that my view of that particular company is right and it will be worth more in the future ( short or long term ).

I bet you were happy to have sold your CBA shares at the time.
You minimize the risk to yourself that you were going to loose even more money, it seems unfair to hold grudge against person who bought it just because they took on the risk and were rewarded for it.

Not that it is a sure thing they were rewarded, they might also have got spooked and sold them for even less then you got for them.

Anyway don't let some of the responses scare you away from these forums, they are jammed packed full of knowledge

Mofra · 24 February 2010

Trembling Hand said:
Mofra but do you consider your trades (long term) are fundamentally different to mine (short term)?

In a way yes, in that the CGT discount is included in my acquisition plan, and I also believe that weighting the importance of fundamental vs tech analysis is different for shorter and longer term trades.

Trembling Hand said:
I always find it .......... amazing, weird,... arrogant? that long term traders consider themselves doing something different to short term'ers.

Arrogant?

Don't get so precious. Different methods work for different folks - a dividend stripping strategy will be fundamentally different to a day trade working off a 15 minute chart. Doesn't mean either are wrong.

Mofra · 24 February 2010

Mr J said:
Us shorterm traders are evil speculators TH. We make crazy markets, destroy companies, and cheat mums and dads out of their hard earned investment cash .

I would expect most longer term traders are grateful for all ST traders in the market in terms of providing liquidity & an entire information-based industry set up to service them.

I also have CBA shares tucked away as a LT hold/invetsment; comsec turn a tidy profit on transaction fees and it's not the LT traders that provide the bulk of that income.

Trembling Hand · 24 February 2010

Mofra said:
In a way yes, in that the CGT discount is included in my acquisition plan, and I also believe that weighting the importance of fundamental vs tech analysis is different for shorter and longer term trades.

Arrogant?

Don't get so precious. Different methods work for different folks - a dividend stripping strategy will be fundamentally different to a day trade working off a 15 minute chart. Doesn't mean either are wrong.

Mofra you haven't got what my question is about. The OP seems to think that some how holding for longer is doing something vastly different than some who hold for a short time. And therefore should be taxed differently

Do you as a long term trader think the underlying process is any different. ie you are an "investor" & I a "trader" or are we at the most basics doing the same process just different application?

matty77 · 24 February 2010

I agree we should tax anyone 90% if they make a profit and sell within 7 days. Also we should CREDIT anyone 90% if they make a loss within 7 days. Sounds like win win situation for everyone then.

skyQuake · 24 February 2010

matty77 said:
I agree we should tax anyone 90% if they make a profit and sell within 7 days. Also we should CREDIT anyone 90% if they make a loss within 7 days. Sounds like win win situation for everyone then.

Eh? Doesn't that just mean everything is deleveraged by a factor of 10?

Make $100, pay 90% tax = $10
Lose $100, get 90% credit = -$10

The count in say $1 in brokerage

Brokers rejoice. Everyone will have to do 10x their normal size. Thats 10x the brokerage to feast upon.

matty77 · 24 February 2010

skyQuake said:
Eh? Doesn't that just mean everything is deleveraged by a factor of 10?

Make $100, pay 90% tax = $10
Lose $100, get 90% credit = -$10

The count in say $1 in brokerage

Brokers rejoice. Everyone will have to do 10x their normal size. Thats 10x the brokerage to feast upon.

i was being sarcastic.

Mofra · 24 February 2010

Trembling Hand said:
Mofra you haven't got what my question is about. The OP seems to think that some how holding for longer is doing something vastly different than some who hold for a short time. And therefore should be taxed differently

I must have misinterpreted your post, apologies.
I don't believe holding for 1 week should be taxed differently to holding for 50 weeks, no.
I have held shares for 2-3 years and still termed them as a trade so have effectively obtained the CGT discount simply because my holding period was long enough, be damned if I'm handing any extra tax back though

Trembling Hand said:
Do you as a long term trader think the underlying process is any different. ie you are an "investor" & I a "trader" or are we at the most basics doing the same process just different application?

I think the term "investor" is far more subjective than a trader. A trader is someone I would define as someone seeking to profit upon disposal or maturity of an asset via a capital gain. An investor I would term as someone who includes ongoing income from the investment as part of (or perhaps most of) the rationale to hold.
FTR I term myself as both.

Bushman · 24 February 2010

Re: Short-term trading strategy discussion

Soft Dough said:
but by investing into shares you are helping the company have access to cash

How so?

The only way a company has access to new 'cash', or capital as it is more commonly called, is by one of:
- raising funds in equity/debt markets;
- 'recycling' capital by selling its underlying assets; or
- reinvesting cash profits made into the business rather than paying out a dividend (i.e. DRP).

Buying or selling a share on the secondary market is cash flow neutral to the underlying entity. Your only argument could be that by buying, you are supporting the underlying share price which will allow the company to raise equity funds at a higher WVAP.

All you gain by purchasing a share is the proportionate right to the assets of the company and, depending on the security, the free cash flow of that entity (paid as a dividend). You will also be able to receive some tax benefit from that security if it pays franked dividends.

Short term traders should be taxed at 90%

wayneL

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Mofra

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