People would find a way round it. We have a 0.5% FTT on UK shares. It's called stamp duty. So nobody day trades the underlying shares. They use derivatives - retail customers mainly use spread bets, and institutions CFD's. You'd expect the government to slap the FTT on derivatives as well. Interestingly they haven't gone down this route. Whether the US government would be as sensible, I couldn't say. Interestingly when FTT was first posulated a few years ago in Europe we analysed the impact a small (say 0.01%) tax would have on our firm. We decided it would make us an extra 10bp a year. Because we were trading relatively slowly it had minimal impact on our bottom line. This was more than compensated for by the expected improvement we'd see in execution costs once all the HFT firms were smoked out of the market GAT
Usually stupid crap gets legislated after market crashes. So wait until the next market crash (whenever that happens) and there will most definitely be a push by stupid people to push the robinhood tax. However, considering it couldn't get done after the last financial crisis, odds are that it will never get done.
Fortunately, the Fed relies on academic research to make decisions. We have not descended into mob rule, yet. surf
So I take it even with an FTT you can still make money holding for a month, which is what I would consider swing trading. Like 2 weeks to 3 months or so.
I think there are different rates depending on what you trade. I read some time ago about it but cannot find it anymore. But I found this: So for futures it would be 0.02% and not 0.5%, which is a huge difference ( 25 times less). Has anybody the rates that are proposed in the FTT? Because at this moment we discuss without having any idea what the impact will be as long as we don't have the exact rates. HFT will be hurt the most I think.
Obviously it depends on the level of the tax, your average holding period and your leverage (which in turn will depend on your appetite for risk, as well as the kind of assets you are holding). At 0.5% or 1%, clearly you have no chance. At 0.01%, which is the level we were looking at, it's possible for relatively slow traders to survive.
This happened when Italy introduced the tax: http://www.ft.com/intl/cms/s/0/e593af72-8bf9-11e2-8fcf-00144feabdc0.html#axzz3ZlWZhZYV
Mmm thats a nice juicey tax stream on paper, can you imagine how attractive it looks to progressives without a clue? Vast majority of it would not exist in practice, futures with 0.02 on each side hugeeee. Things are going well considering but never stop getting your word out there in response to the disinformation.