How to set up my new Day Trading business?

[DavidTrader86]

Might be wrong/off-base, apologies if I am, but that reeks of being insufficiently funded.

Even $5-$10 stocks. Correct me if I am wrong.

$30,000 aint enough to get started?

 

[SunTrader]

$30,000 aint enough to get started?

To get started, sure. To last, no.

I started and sold two businesses - 1 retail, 1 services. I wouldn't dream of starting another (this one trading anyway is my last) with less than $100k.

 

[Millionaire]

$30,000 aint enough to get started?

Do you have more in reserve? To recharge your account if you have to?

 

[DavidTrader86]

Do you have more in reserve? To recharge your account if you have to?

yes, i do

 

[2rosy]

Howdy!

After doing a little day trading for several years (little here and there, not consistently), and paper trading for the past couple of months (consistently, and profitably), I want to take the dive into day trading professionally.

How do y'all have your businesses set up?
I was thinking about opening up a spousal LLC, then a brokerage account in it's name. My understanding is that this would help with the qualification for TTS for the Section 475(f) election.
My understanding is that if you qualify for it, not only is there the lower tax benefit, but then you also don't have to list every single trade on your taxes, correct?

Any insight y'all can offer on the legal/structual side would be helpful.

you never have to list every single trade on your taxes

 

[Millionaire]

yes, i do

Well that should stop you going out of business due to an initial drawdown.

You then need to make sure you have a valid edge that is profitable, otherwise you are doomed to fail.

Assuming your edge is valid and you can be profitable. Stocks are not highly leveraged like futures or options. So high returns like 100% or 300% are harder to achieve with stocks.

50% might be more realistic from stock trading. But thats only $15K a year. Even if you can make 100% it is only $30K..

 

[SunTrader]

That is what I was thinking. How much can $30k really return in a year. If all goes well.

 

[Snuskpelle]

$30k is fine if he has several years to compound the account without withdrawing anything. Otherwise, it's too little, barring some incredible strategy that lets him >5x in a year.

 

[DavidTrader86]

That is what I was thinking. How much can $30k really return in a year. If all goes well.

as stated in a previous post, I also own an insurance agency, so the income is not an issue. My intent is to build up the account to the point where, at some point in the future I may be able to live off the income from daytrading.

 

[deaddog]

as stated in a previous post, I also own an insurance agency, so the income is not an issue. My intent is to build up the account to the point where, at some point in the future I may be able to live off the income from daytrading.

Why a business at this time? As a business won't data fee's etc be more expensive although they can be written off.

What is your time line for being able to live off trading income?