ZDREG, It depends which Tax you look at and whose Tax. If you google it there are numbers that range from .005% to .5% If you are talking about .001% transaction tax then that is 100,000* (.001*.01) which equals 1 dollar per 100,000$. If it were .1% then that would be .1*.01 which would be 100 per 100,000 each way , so it all depends. A .1 , .25, .5 would defiantley make trading non existent for a day trader. But a .05 tax or less will make it still viable to trade with a little less money in our pockets. Either number sucks, but there are certain numbers that will put us out of business and some that wont
Quarter of the capital goes to overhead cost and many strategies that are profitable now will become worthless.
gkishot, I cannot argue that point with you, I am sure you are right. I guess it all comes down to the way people trade, some arb where that miniscule percent will make it unrpofitable and some scalp so much it will ruin them. I use to be in the camp where if can turn 100k over a few thousand times a day and it would have killed me. Now I sort of trade of longer charts and still intraday so wouldnt hurt me as much and some people as well. So yes it could make peoples strategies unprofitable. I am a trader so no matter how someone makes money, whether they make 500 bucks per 100k of capital or 5 bucks per 100k trading and turn it over many times a day so it adds up,it is trading and I do not want to see anyone get out of the buisness becuase of this tax. I want my livelhood to stay as well a all traders, we have a right to do this, we pay taxes already.
I've posted this to avoid any confusions ( similar to one between 0.001(=0.1%) and 0.001% ) since tax rate is usually expressed in terms of percentage. The correct formula should be: $100,000 * 0.1% * 2 * 250 days = $50,000
I can't believe this thread is still around, but I understand the concern with talk of the STT catching a few more headlines last week. It appeared that the AFL-CIO jumped on board. Here is why I was floored by this and am not in the least concerned about this ever coming into law. Last serious US look at an STT (Securities Transaction Tax) was in 1990 and proposal was eventually defeated because of strong lobbying from one influential group. NOT securities firm lobbyists because they would without question be exempt, as is the precedent set by STT's around the globe. True that revenues would be hampered by lowered trading volumes, but you cannot tax market makers. The lobbyist group that defeated this proposal - organized labor. That's right, the AFL-CIO. When the numbers were crunched they realized the single most affected group by this tax; the $20TRILLION in global pensions. This amount dwarfs any other group; mutual funds, hedge funds, etc... This would be a direct tax not on the wealthy or those that caused the 'problems', but on the retirement funds of blue-collar workers. Has the AFL-CIO changed sides? I don't believe so, management there is just stupid and fired off a shot at the wealthy/Wall St not knowing the facts and their own history with regards to this. The precedents set by other governments, a similiar tax in the 1980's nearly crippled the Swedish gov't because of the illiquidity in the treasury market after imposing an STT, and the fact that most all countries are doing away with STT's or plan to. History shows they have the opposite effect than intended. They widen spreads hurting the individual investor and increase volatility as opposed to lessening it. Put all of this liberal ranting about an STT on 'ignore'.
I posted about this nearly a year ago, and my response is no different. For the very reason expressed by the previous poster, an STT tax would destroy the economy of the United States. Savings would diminish through this tax. The US government would be bankrupt, but it's not yet. It can be with this tax. The same thing that happened in Sweden would happen here, guaranteed. Only stupid people support this tax, but I have faith that any amount of support would be quickly met by nay votes once they consult their states' economists about the effects.
This thread is still around to get our voices out whenever the pro-tax crowd pops up anywhere in the media. That's its function. That's why it's going to remain here.