Looking to go pro. Need advice.

K

Kai Akua

Aloha Everyone.

I have been pattern day trading options for over two years now and I finally feel comfortable doing this for full time income. However, i would to keep my day job till the end of this year. I understand I need to form an LLC to get the best tax advantage and not have the IRS questions my trader status. My questions are as follows.

1. I currently use trademonster for my brokerage. I have three accounts with them, a Roth IRA, personnel and a Joint account. I need three accounts to effectively trade option spreads as I can not create both a long and short position when I have the spreads overlapping. I have done some research on the internet and I can not find a brokerage that will let me have a professional brokerage account with multiple sub-accounts in it. Does any one have any ideas or experience on this? Thier would be no point start a LLC if I can not have sub-accounts with my style of pattern day trading, i would be better staying as a sole proprietor.

2.I have been using Trademonster for two years and Love the platform, the fees ad up as I had a market gain of over $200,000, but only a $110,000 net gain last year. I trade on the fringe of 10,000 contracts per month in each account. I do get better commission structure because of this, but I need to figure out how to get my commission down a bit to be more profitable. Any advise would be great here.

3. Any other ideas, comments etc.???

Any insight would be great. This is my first post here, but I have lurked around a bit in the past.

Mahalo. ;-)
 
Your not a professional if you are trading your own capital.

There is a misconception on what a 'professional' is?

If you work for a bank,hedge fund, or any business that uses the data or exchange your a professional. A professional is just someone who trades or uses the data for another person or entity.

As for taxes, professionals electing to use the capital gains as business income can use business deductions like data fees, computer, internet connectdion as your business. Individuals cannot use commissions, internet connections or data fees or research cost as business expense.

The only person cares is the exchange that gets probably 99% of it's revenues from professionals who trade or invest for other people.

Unless you are trading other people's money I would would care about business expenses like office space, etc, the expense isn't much if you are trading your own capital at home.

A hedge fund is a professional or trader working for a prop firm is a 'professional'


Quote from Kai Akua:

Aloha Everyone.

I have been pattern day trading options for over two years now and I finally feel comfortable doing this for full time income. However, i would to keep my day job till the end of this year. I understand I need to form an LLC to get the best tax advantage and not have the IRS questions my trader status. My questions are as follows.

1. I currently use trademonster for my brokerage. I have three accounts with them, a Roth IRA, personnel and a Joint account. I need three accounts to effectively trade option spreads as I can not create both a long and short position when I have the spreads overlapping. I have done some research on the internet and I can not find a brokerage that will let me have a professional brokerage account with multiple sub-accounts in it. Does any one have any ideas or experience on this? Thier would be no point start a LLC if I can not have sub-accounts with my style of pattern day trading, i would be better staying as a sole proprietor.

2.I have been using Trademonster for two years and Love the platform, the fees ad up as I had a market gain of over $200,000, but only a $110,000 net gain last year. I trade on the fringe of 10,000 contracts per month in each account. I do get better commission structure because of this, but I need to figure out how to get my commission down a bit to be more profitable. Any advise would be great here.

3. Any other ideas, comments etc.???

Any insight would be great. This is my first post here, but I have lurked around a bit in the past.

Mahalo. ;-)
More...
 
Eoption.com

$3 a ticket plus .10 a contract.

Probably you can renegociate the ticket charge to a better per contract rate.

that will save you probably an extra 50k
 
As cramers said daytrading is for the birds meaning people with accounts less than 1 million. or under 500,000 cause in this business, size does matter.

guys like icahn or buffet who manage over 1 billion don't daytrader or trade because they cannot or their size is too big to trade or daytrade.




Quote from Kai Akua:

Aloha Everyone.

I have been pattern day trading options for over two years now and I finally feel comfortable doing this for full time income. However, i would to keep my day job till the end of this year. I understand I need to form an LLC to get the best tax advantage and not have the IRS questions my trader status. My questions are as follows.

1. I currently use trademonster for my brokerage. I have three accounts with them, a Roth IRA, personnel and a Joint account. I need three accounts to effectively trade option spreads as I can not create both a long and short position when I have the spreads overlapping. I have done some research on the internet and I can not find a brokerage that will let me have a professional brokerage account with multiple sub-accounts in it. Does any one have any ideas or experience on this? Thier would be no point start a LLC if I can not have sub-accounts with my style of pattern day trading, i would be better staying as a sole proprietor.

2.I have been using Trademonster for two years and Love the platform, the fees ad up as I had a market gain of over $200,000, but only a $110,000 net gain last year. I trade on the fringe of 10,000 contracts per month in each account. I do get better commission structure because of this, but I need to figure out how to get my commission down a bit to be more profitable. Any advise would be great here.

3. Any other ideas, comments etc.???

Any insight would be great. This is my first post here, but I have lurked around a bit in the past.

Mahalo. ;-)
More...
 
A professional is someone who is managing or trading other people's money or works for a company or business that trades or manages other people's money.

yahoo pays thousands of dollars to CME, NYSE to publish stock quotes and you cannot even use the data on your own stock website for 'profit' hobby site fine but not a business.

your not a professional by definition.


Quote from Kai Akua:

Aloha Everyone.

I have been pattern day trading options for over two years now and I finally feel comfortable doing this for full time income. However, i would to keep my day job till the end of this year. I understand I need to form an LLC to get the best tax advantage and not have the IRS questions my trader status. My questions are as follows.

1. I currently use trademonster for my brokerage. I have three accounts with them, a Roth IRA, personnel and a Joint account. I need three accounts to effectively trade option spreads as I can not create both a long and short position when I have the spreads overlapping. I have done some research on the internet and I can not find a brokerage that will let me have a professional brokerage account with multiple sub-accounts in it. Does any one have any ideas or experience on this? Thier would be no point start a LLC if I can not have sub-accounts with my style of pattern day trading, i would be better staying as a sole proprietor.

2.I have been using Trademonster for two years and Love the platform, the fees ad up as I had a market gain of over $200,000, but only a $110,000 net gain last year. I trade on the fringe of 10,000 contracts per month in each account. I do get better commission structure because of this, but I need to figure out how to get my commission down a bit to be more profitable. Any advise would be great here.

3. Any other ideas, comments etc.???

Any insight would be great. This is my first post here, but I have lurked around a bit in the past.

Mahalo. ;-)
More...
 
the data for real time is for 'personal use' only.

also, in prop firms it's professional status since your trading firm capital. and each desk pays separate software fees. a prop firm can spend like thousands in monthly software and data fees because it's professional.

professional get better deal since they trade so much and have millions in capital.

Quote from noprofessionals:

A professional is someone who is managing or trading other people's money or works for a company or business that trades or manages other people's money.

yahoo pays thousands of dollars to CME, NYSE to publish stock quotes and you cannot even use the data on your own stock website for 'profit' hobby site fine but not a business.

your not a professional by definition.
More...
 
Good Morning!

I guess I misstated my intentions. I think of a professional as some one that trades for a sole living. I have no intention of ever handle other peoples money. I just want to manage my own money and continue my way of life style.

I guess my new questions are:

1. How do I file for trader status with an LLC (or multiple LLC's, as I need multiple accounts/sub-accounts to execute my spreads from) using my regular personnel accounts at trade monster? Or will I need to create two separate LLC's with each its own $130/month fee etc. I would like to avoid any more fees.

2. How can I lower my commission structure? trade monster has a very nice platform for spreads compared to everyone else I have used.

3. Can some one point me in the right direction of the section 1256 and the 60/40 blend? I am confused how this would apply if I did not elect trader status. I have read that an investors can use this rule also. Please advise. I trade options spreads daily on AAPL, GOOG, PCLN etc. I am pretty sure it applies to me. I am in 100% cash 99% of the time at close every day. Any help on this would be great as I can see some real savings in this area.

4. How are other people setting up their LLC? Small salary, for Earned Income, then a owner withdrawal at the end of the year? With $100,000 of profit at the end of the year, what would be a fair salary that would not raise any reflags with the IRS? $3,000/mth? The hardest part for me is figuring out how to structure all this.

Thats it for now. Pretty slow morning in the market for me. You have to love waking up every day at 3:30am to trade!

Alohas! ;-)
 
You must log in or register to reply here.
Back
Top