no reasonable person would derive that from my post. But let me make it very clear for you. Transaction related costs in the region of 0.22% put a relatively small dent into the book of someone who trades high beta stocks such as Tencent which often trades several hundred basis points intraday.
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New Tax on All Stock Trades
- Thread starter seasideheights
- Start date
I think you should go back to the drawing board and get up and running on some very basic algebra. It really is not that hard.
Even for 1% a day it has to come from just one single daily trade for him to be profitable. That means the trader has to be 100% correct to overcome 0.5% tax.
Indeed, in many jurisdictions and for most CFDs, stamp, lending rates, interest on the borrowed loan are fully priced into the CFD via daily interest charges, commission, and spread. If you think brokers offer you a free lunch then you are pretty mistaken.
That statement does not imply in any way that a CFD is superior or inferior to the underlying. Not sure what issue you are hung up on. I posted a detailed quantitative paper that walks you in detail through the pricing of CFDs. CFDs pricing is anything but equity like no matter they replicate equities or not. CFD pricing is much more similar to a futures contract.
That statement does not imply in any way that a CFD is superior or inferior to the underlying. Not sure what issue you are hung up on. I posted a detailed quantitative paper that walks you in detail through the pricing of CFDs. CFDs pricing is anything but equity like no matter they replicate equities or not. CFD pricing is much more similar to a futures contract.
He also wrote :
"CFDs FULLY reflect stamp tax via the CFD pricing"
which became a few posts later :
"I never said nor say that CFDs are inferior or superior to trading the underlying cash equity, I am saying they are not equally priced. Simple as that."
or
"clearly the two are not identical else you would not trade the CFD in the first place."
Which are quite different assertions.
But we are supposed to be stupid because we had not taken into account his own backpedalling in advance.
Guys, please do not be impolite and try to force Voly into making sense.
Everybody needs friends.
Here Voly, have a cookie.
If you think brokers offer you a free lunch then you are pretty mistaken.
For the second time, I'll quote my first post on this topic. We both may not be native english speakers but I'm pretty sure we read and write it well enough to understand I don't claim underlying shares and CFds are priced identically or CFDs are a free lunch. If you insist on reading it differently, rather than an English language tuition, a couple of private meetings with a psychiatrist might be most helpful.
"Even for french equities at 0.2% transaction tax, I suspect most funds do the same calculation I do. They try to anticipate their holding period, commissions and interests and trade dma CFDs rather than underlying stocks if it's cheaper or other untaxed derivatives."
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no reasonable person would derive that from my post. But let me make it very clear for you. Transaction related costs in the region of 0.22% put a relatively small dent into the book of someone who trades high beta stocks such as Tencent which often trades several hundred basis points intraday.
.22% per transaction per day shaves 55% off the annual profits. Not bad! Speaking of basic algebra.
.22% per transaction per day shaves 55% off the annual profits. Not bad! Speaking of basic algebra.
How did you come up with that ? What is the basis for the profits?
But considering the taxes are paid on all trades, winning, breakeven and losses, it must shave an awful lot off the profits.
And you can be sure Voly's mates are not averaging 1% profit on their daytrades.
I never criticized you on that post. I stated what I stated and you are the one who is reading my posts purposely out of context and attack me left and right while providing zero factual backup for your attacks. I concurred with you, in fact, that professionals run due diligence and are pretty well aware of the trade offs between the underlying cash equity and CFDs. But 80-90% of the information by some other posters that was put up on this thread is simply factually wrong.
For the second time, I'll quote my first post on this topic. We both may not be native english speakers but I'm pretty sure we read and write it well enough to understand I don't claim underlying shares and CFds are priced identically or CFDs are a free lunch. If you insist on reading it differently, rather than an English language tuition, a couple of private meetings with a psychiatrist might be most helpful.
"Even for french equities at 0.2% transaction tax, I suspect most funds do the same calculation I do. They try to anticipate their holding period, commissions and interests and trade dma CFDs rather than underlying stocks if it's cheaper or other untaxed derivatives."
What? Before I put you on ignore, too let me run you through a simple example:
If you trade a stock like Tencent that often moves 3-5% a day then you may at some days have gotten stopped out, at other days made 1-3%, and in light of such return distributions a tax of 0.22% is not negligible but at the same time not necessarily negating your business case. I have zero idea where you constructed your 55% figure from.
If you trade a stock like Tencent that often moves 3-5% a day then you may at some days have gotten stopped out, at other days made 1-3%, and in light of such return distributions a tax of 0.22% is not negligible but at the same time not necessarily negating your business case. I have zero idea where you constructed your 55% figure from.
.22% per transaction per day shaves 55% off the annual profits. Not bad! Speaking of basic algebra.
How did you come up with that ? What is the basis for the profits?
But considering the taxes are paid on all trades, winning, breakeven and losses, it must shave an awful lot off the profits.
And you can be sure Voly's mates are not averaging 1% profit on their daytrades.
Easy. Let's say your transaction amount is $1000 every day. 0.22% * $1000 = $2.2.
$2.2 * 250 working days = $550 is your transaction cost.
$550/$1000 * 100% = 55%.
Basically 0.22% * 250 = 55%.
Volly, just now :
"I never criticized you on that post. I I concurred with you, in fact, that professionals run due diligence and are pretty well aware of the trade offs between the underlying cash equity and CFDs. But 80-90% of the information by some other posters that was put up on this thread is simply factually wrong."
But a few post before :
Memory loss on yesterday events uh ? Not a good sign for a top trader.
Another cookie ?
"I never criticized you on that post. I I concurred with you, in fact, that professionals run due diligence and are pretty well aware of the trade offs between the underlying cash equity and CFDs. But 80-90% of the information by some other posters that was put up on this thread is simply factually wrong."
But a few post before :
you contradict yourself: You claim the whole time that CFDs are priced in the exact same way than cash equity .
Memory loss on yesterday events uh ? Not a good sign for a top trader.
Another cookie ?