Day Trading: Facts, Fiction and Discussion
- JenL_2
- Karin_
- TONYBRIG
- Kirk
- JenL_2
- tradebreakouts
- Kirk
- yellowishjazz
- yellowishjazz
- Kirk
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» JenL_2 - DAYTRADER TAX
Tax Rules for the Day Trader were posted above:Rande cited in FortuneInvestor.com
This is 12/7 Tip World's Online Trading Tip of the Day:
DAYTRADER TAX
Here's a good idea in the "Why didn't someone think of this sooner?" category. If you frequent the investment forums, especially around the end of the calendar year, you know that tax questions are a recurring vexation for the active trader.
You don't need to be a day trader to be involved with short-term versus long-term tax queries.
Daytrader Tax is a production of a CPA company whose core business is to provide tax planning and preparation to frequent stock traders.
The site offers some valuable information on its pages, but it mostly exists as a promotion of commercial information packages that furnish tax strategies and guides to new IRS rules.
Brad Hill http://www.bradhill.com is the author of 10 books about the Internet and personal technology. He currently teaches Investing on the Web, an online course for ZDU; writes the Investor 2000 column for Raging Bull; and is the producer of Closing Bell, a daily market report. The information contained in this tip is based on rules and regulations existing at the time of initial publication. These rules and regulations are subject to change. Neither TipWorld nor the author of this tip is engaged in rendering legal, accounting, or other professional services. The reader should always consult with a professional adviser to ascertain current rules and regulations and the application of this tip to personal circumstances.
I just glanced at the DayTraderTax.com site. They are trying to sell their tax preparation packages for the DayTrader, but there are different levels of service available, depending on how much the traders want to do on their own......Jen
-- posted by JenL_2
» Karin_ - New rules for day-traders
New rules for day-traders and their margin account Bob will be delighted tomorrow and talk about it for ever:The NYSE and Nasdaq are seeking to define day traders as investors who move in and out of a single stock more than four times within five days in one specific margin account.
The initiative on the part of the markets follows a recent decision by the Federal Reserve to leave national minimum margin requirements unchanged. The Fed allows investors to borrow up to 50 percent of a stock purchase. For example, an investor who wants to purchase $100 worth of stock can borrow up to $50 for that deal.
The NYSE and NASD proposals would force day traders to maintain a minimum of $25,000 at all times in their margin accounts, versus $2,000 for other margin account holders. Day traders currently only have to keep $2,000 in their accounts.
The high-risk group would also only be able to invest up to four times the amount of equity they hold in an account at any time during the trading day.
If a day trader violates that limit, his borrowing privileges would be cut to only double the value of the equity in his account. Also if he fails to make good on a margin call, he would only be able to invest with their own cash for a period of time.
-- posted by Karin_
» Kirk - FREE Information Useful to Traders
I've added a new section to my reading list web page for traders. This URL will take you there:or http://pw2.netcom.com/~kirk_69/MyBookLis...
Kirk
-- posted by Kirk
» JenL_2 - Rise in Margin Requirements
This from 8/27 WSJ:Margin Requirements Rise To $25,000 for Day Traders
By AARON ELSTEIN and STACY FORSTER
The ante for many day traders is rising to $25,000.
Before now, an investor needed as little as $2,000 to open a margin account and begin stock trading with borrowed funds. Starting Monday, day traders will need more than 12 times as much in their margin accounts to buy shares traded on the New York Stock Exchange. A similar rule goes into effect Sept. 28 for stocks traded on the Nasdaq Stock Market.
So who is a day trader? According to the new rule -- the stock exchanges' first attempt to define this group of investors -- it is any investor who buys and sells a stock in the same trading session at least four times a week. Investors are exempted from the new margin rule, however, if such day trades represent less than 6% of weekly transactions.
The new rule will likely have little impact on the small online brokerage houses that cater specifically to day traders, says James Lee, president of the Electronic Traders Association, a trade group for day traders. That is because many of these brokerage houses, which often are a source of borrowed funds used by day traders, already require customers to pony up at least $25,000 to begin any trading.
The new requirement could be another impediment for larger, more well-known online brokerage houses, which have promoted margin-balance requirements of as little as $2,000 to attract active traders.
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With many online stock investors refusing to trade during the market's downturn, this has been a difficult year for online brokerage houses such as Charles Schwab Corp., of San Francisco, E*Trade Group Inc., of Menlo Park, Calif., and Ameritrade Holding Corp., of Omaha, Neb. Activity by day traders, however, has defied that tremendous drop-off in volume.
Brokerage houses generally require that margin investors maintain in their account at all times $1 of stock for each $4 in their account. Day traders, however, often cash out at the end of each trading session. Thus, they have been able to dodge rules that govern many margin accounts.
The Big Board first proposed the new rules in 1999 amid concerns that it was too easy for novice traders who didn't fully understand the risks of day trading to borrow money and lose it all.
Mr. Lee of the Electronic Traders Association says the minimum of $25,000 was set arbitrarily and that regulators and stock markets began formulating the new rule at the peak of the technology-stock bubble. "I think the $25,000 requirement is much too high for where the market is now," Mr. Lee says.
Ed Naylor, an Austin, Texas, day trader, said in comments to the Securities and Exchange Commission that the change "singles out a small group of people" and "makes absolutely no sense at all."
Still, even before the new rules go into effect, TradeStation Group Inc., of Miami, already required a minimum $50,000 balance to open a margin account, while All-Tech Direct Inc., of Montvale, N.J., required $25,000.
Some brokerage house executives say the new rule could come as a shock to many. "It will definitely be a surprise to a lot of people," says Kyle Zasky, president of Edgetrade.com Inc., a New York day-trading house that requires a minimum margin balance of $10,000 for Internet customers. "The public has not been very well educated about margin to begin with."
At E*Trade and Datek Online Holdings Corp., customers need an account balance of $2,000 to open margin accounts. CyberTrader, a unit of Charles Schwab, requires a minimum $5,000 balance.
"The new rules could knock out a lot of accounts," Mr. Lee says. The new margin rule may prompt customers with small accounts at several different brokerage houses to consolidate their accounts, says Mike Dunn at Datek, of Iselin, N.J.
Ameritrade spokeswoman Natalie Carlson says the rule change shouldn't affect customers who came to Ameritrade from Tradecast, a small brokerage house that caters to day traders which Ameritrade bought in February for $67 million. Those customers already meet the higher margin requirement, she says.
Subscribe to WSJ Online @ http://www.wsj.com
.....Jen
-- posted by JenL_2
» Kirk - Watchout - Day Trading Making a Comeback
.Day Trading Makes a Comeback
Sunday December 19, 11:30 am ET
By Michael Flaherty
http://biz.yahoo.com/rb/041219/bizfinanc...
NEW YORK (Reuters) - As the stock market edges up and the economy improves, day traders are tiptoeing back into a much-maligned profession that was nearly wiped out a few years ago.
The success of day traders, who rapidly buy and sell small chunks of shares throughout a market session, excited envy and admiration during the stock market boom of the 1990s.
But the collapse of the Internet bubble in 2000 not only sent these rookie investors back to their day jobs, but also gave day trading a bad name.
The unlicensed newcomers were blamed for adding irrationality to an exuberant market. Many of them quit day trading when stock prices plunged and their million-dollar earnings evaporated.
Now experts say a new breed of day trader has emerged. Although there are not nearly so many of these investors as the estimated 8,000 that joined the profession in the late 1990s, their influence on the market is growing.
Day trading transactions often are still a matter of pennies, conducted in seconds. But veterans of the field say it's a different game now, and today's day trader is better trained, more averse to risk, and more knowledgeable about the market.
While good day traders can make a decent living, their earnings potential remains well below the big bucks they got in the boom years and what top Wall Street traders receive today.
"We no longer have chiropractors and dentists coming in and telling us they quit their jobs to be day traders," said Charles Vaccaro, president of HLV Capital Inc. "What's completely changed is the type of person doing this."
In the last year, the New York-based private equity trading firm increased its crew of intraday traders from six to 40. The people who walk through its door tend to be younger, smarter and more aware of the risks, Vaccaro said.
Day trading newsletter publisher Christopher Worsh agreed.
"The Joe Schmo trucker isn't really day trading anymore," said Worsh, who day trades from his San Francisco home. "Three years of hard lessons scared quite a few people away from the business."
DAY DREAM
At HLV's one-room office in Times Square, dozens of casually dressed young men sat at computer terminals and stared at their screens. Except for the tapping of their keyboards, the only sound came from mounted televisions tuned to financial news channels.
By 12:45 p.m., Alex had made $1,700 on a handful of stocks and was on pace to trade at least 1 million shares. HLV did not want the last name of its traders in print.
The 30-year-old Yale graduate earned $25,000 in a recent month -- a good living, but nowhere near the millions that day traders raked in during the Internet boom.
"I knew guys who were pulling in $30 million a year as day traders," said Erik Solomon, an HLV manager. "But they didn't have a plan, and they paid the price. The first thing we teach our traders is what not to do."
Among those lessons: Focus on a small number of relatively cheap stocks; close out positions at the end of the day no matter what; and don't try to outthink the market.
Aside from better fundamentals, the major difference in day trading today is the level of sophistication of those doing it, said Don Bright, director of education at Las Vegas-based Bright Trading LLC.
"The environment is a lot more professional," said Don Bright. "We're not seeing people coming in blind-eyed anymore."
Traders at Bright Trading are licensed, and learn about the market in "boot camp" training at the company, he said.
BACK IN THE GAME
Signs of a trading resurgence from the retail crowd include spikes in customer activity at online brokerage firms like Ameritrade Holding Corp. (NasdaqNM:AMTD - News), Charles Schwab Corp. (NYSE:SCH - News) and E*Trade Financial Corp. (NYSE:ET - News), which cater to individual investors, though not necessarily hard-core day traders.
Large volume upswings in a single stock are another indication that the day traders are back. Such was the case on Dec. 8 with Sirius Satellite Radio Inc. (NasdaqNM:SIRI - News), which sank 27 percent after a downgrade. About 500 million of the shares changed hands, nearly one-fourth of the Nasdaq's entire volume that day.
"You wouldn't see that kind of volume if it wasn't for day traders," said Richard Repetto, associate director of research at Sandler O'Neill & Partners. "They're still having a material impact, especially with volatile, speculative stocks."
The federal government has also done its part to limit the risks of day traders. That push began shortly after July 1999, when Mark Barton, an Atlanta day trader, killed his family and nine people at two brokerages in Atlanta after he had taken more than $150,000 in losses.
Among the rules that the U.S. Securities and Exchange Commission put in place was a stipulation that day traders must open accounts worth at least $25,000.
"Most of those day trading today understand the risks," said Joe Borg, enforcement chairman for the North American Securities Administrators Association. "It's not like the Wild West of before, but it's definitely making a little bit of a comeback."
-- posted by Kirk
» yellowishjazz - I Agree That Day Trading Is A Job
And like any job, it takes a lot of time and effort to learn how to succeed. I spend at least 10 solid hours each day researching and trading and it took me about 2 years before I finally started making money. One of my biggest pieces of advice would be to never change something if it's making you money. If it ain't broke, don't fix it!-- posted by yellowishjazz
» yellowishjazz - Tony...
In response to Tony... posted by JenL_3:I need to read up on SEP IRA more. I think i need to switch from my roth
-- posted by yellowishjazz
» Kirk - New Day Trading Foum At Suite101
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-- posted by Kirk
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