1/4% Tax on all stock trades pushed in NY Times today

Definition of active trader is important..

1000 trades a year sounds very active to some people but some traders do many more trades than that.

I used to make about 1000 futures trades a year.

At the EU proposed 0.01% futures rate for FTT, i calculated that about 30% of my gross profits would eaten by the FTT when i was making 1000 trades a year.

I have recently reduced my trading to just 320 trades a year, so just 10% of my gross profits would now be eaten by the proposed FTT (at the proposed futures rate of 0.01%).

Obviously for stock traders 0.1% and above are much more punitive than what a futures trader would be expected to pay.
 
The first thing they would do after an implementation of the FTT is to raise the rate. So don't discuss about percentages.
 
Quote from southall:

Definition of active trader is important..

1000 trades a year sounds very active to some people but some traders do many more trades than that.

I used to make about 1000 futures trades a year.

At the EU proposed 0.01% futures rate for FTT, i calculated that about 30% of my gross profits would eaten by the FTT when i was making 1000 trades a year.

I have recently reduced my trading to just 320 trades a year, so just 10% of my gross profits would now be eaten by the proposed FTT (at the proposed futures rate of 0.01%).

Obviously for stock traders 0.1% and above are much more punitive than what a futures trader would be expected to pay.
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A good example of what I discovered the hard way when I first started trading Thai stocks. I began with day trading but the VAT which works out to 0.0105% kept eating into my profits. That is why I switched to swing trading.

The problem I see with swing trading Futures is the overnight risk. Thai stocks can gap at the open, but that is a lot different from the overnight moves that U.S. Futures sometimes make when bad news comes out of Europe.

One of the reasons I have been looking into options is for protective puts / calls on futures positions. But that still means margin to cover the move on the futures contract, so it is not a solution for traders who do not have the required capital. For them an FTT is fatal, because overnight hold is not an option.
 
If the liberal, socialists, democratic party is not stopped soon here in the States, not only can we expect the FTT which will ruin all traders and destroy our markets, but expect things like this:

http://www.nytimes.com/2012/08/08/b...-leave-if-75-tax-rate-is-passed.html?_r=2&hpw

The biggest terrorist to the individual and economic freedom of the United States of America is the democratic party. Actually, they are the biggest terrorists to the Constitution that we will ever see.
 
Quote from justrading:

Even if I trade FX with Oanda and use the 50:1 leverage (which I would not), for a 0.001% FTT to put me out of business, I would have to average no more than 0.1% profit per trade after commissions (ie 0.001% *50*2 sides). I'm not in the HFT game so if all I made was 0.1% per trade I would quit and leave my money in the bank.

But let's be crystal clear, this is only if there is no cascading or multiplier effect.

If anyone is interested, this is the calculation for a small account.

Capital per trade - $10,000

Trade value @ 50:1 = 10,000 x 50 = $500,000.

Assume close trade at breakeven, round turn value = 500,000 x 2 = $1,000,000

FTT @ 0.001% = 1,000,000 x 0.001% = $10

On capital of $10,000, $10 = 0.1%

Clearly this example does not factor in commissions, so breakeven would be 0.1% + RT commission, beyond that profits. [/B]
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Somehow I don't see a FTT on fx happening soon. Free fload of cash money, not regulated, of exchange, etc. I rather think they will only be looking at stocks and exchange traded derivatives before they will burn their hands on more complicated otc products or cash transactions. When everything is set for that they will probably add whatever to their list, but at that point brokers, exchanges and whatever have come up with, new, not listed products. This doesn't say that it won't affect us when it's there however. Liquidity will dry (not on fx I guess) and new products, like cfd's, might be less attractive to trade (spreads) as the manipulating bucket shops are involved.
 
Quote from southall:

Definition of active trader is important..

1000 trades a year sounds very active to some people but some traders do many more trades than that.

I used to make about 1000 futures trades a year.

At the EU proposed 0.01% futures rate for FTT, i calculated that about 30% of my gross profits would eaten by the FTT when i was making 1000 trades a year.

I have recently reduced my trading to just 320 trades a year, so just 10% of my gross profits would now be eaten by the proposed FTT (at the proposed futures rate of 0.01%).

Obviously for stock traders 0.1% and above are much more punitive than what a futures trader would be expected to pay.
More...

"Obviously for stock traders 0.1% and above are much more punitive than what a futures trader would be expected to pay. "

it is not obvious to posters like justrader and ilk, who lack the necessary intellectual discipline to do the calculations.
Semi- active trader does 20 trades/day. typical trade is 500 shares at $20. assume u are flat at the end of the day. Assume a .001 tax rate
capital $50,000 maximum exposure is $200,000
500 x $20 x10(#trades subject to tax) = $100,000 x .001 = $100
$100 x 250 = $25000 = 50% hit to capital.
same calculation with a .002 rate =$50,000 = 100% hit to capital.

.001 is at the lower end of the suggested rate for stock traders. .003 is more typical. i am sure that posters are capable of doing the calculations at .003.
 
Quote from zdreg:

"Obviously for stock traders 0.1% and above are much more punitive than what a futures trader would be expected to pay. "

it is not obvious to posters like justrader and ilk, who lack the necessary intellectual discipline to do the calculations.
Semi- active trader does 20 trades/day. typical trade is 500 shares at $20. assume u are flat at the end of the day. Assume a .001 tax rate
capital $50,000 maximum exposure is $200,000
500 x $20 x10(#trades subject to tax) = $100,000 x .001 = $100
$100 x 250 = $25000 = 50% hit to capital.
same calculation with a .002 rate =$50,000 = 100% hit to capital.

.001 is at the lower end of the suggested rate for stock traders. .003 is more typical. i am sure that posters are capable of doing the calculations at .003.
More...

You are taking my comments that a .001% tax on the Kospi is not the end of the world and twisting them to a 0.1% tax on US stocks is acceptable.

Show us all where I wrote that?
 
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