The total cost of a trade affects all traders who take a position. The total margin required to hold a position open isn't a direct cost, but instead an indirect one as based off a capital requirement. This only affects traders who wish to use that level of risk as compared to their account size. So yes, there is a greater margin requirement from Oanda as it relates to intraday positions when comparing spot to futures. Oanda's leverage is 50:1. --- If you're not restricted to US brokers though, getting trading conditions with 100:1, 200:1, even 400:1 leverage is really not that hard. Pepperstone, as an example, has an account where the average spread is ~0.5 pips, tied with a commission of $0.7 RLT per $10k traded.. together making a total cost of ~$1.50 (nearly the same as Oanda.) However, they offer leverage up to 400:1 .. which is far more than even the intraday margin can offer in Futures. Dukascopy goes to 100:1 as another example, bringing it nearly in line with futures' intraday margins. Atop of that, these margin rates apply all the time, not just intraday, so holding a swing position during the week is possible.
Jack_Larkin: speculative trading isn't about costs, it's about profits if I ran a retail business selling some products, the only way I could increase profits besides greater discounts from product suppliers and more customers, is to lower costs of how I run the business - no employees, store open 12 hours or more a day 6 or 7 days a week, 2 hours for picking up supplies from wholesalers, stocking shelves and cleaning the store, no heat in the store, bring your own bag, minimum lighting etc I trade the 6E where the margin is $500 and rt commission is $5.94 vs $3,141.20 and $15 for spot - IF the spread is at the minimum at the time the trade's entered, but . . . "Tricia: Thank you for choosing OANDA. How may I help you? Wallace: hi, if the spread is 1.2 pips when I enter a trade but 10 pips when I exit the trade, is the spread cost 1.2 or 10 pips ? Tricia: The spreads is the difference between the bid and ask prices. Tricia: If you exit the trade when the spreads is 10, it means you are getting the less competitive prices. Wallace: so you're saying I'd be charged 10 pips for the trade when I closed it not 1.2 ? Tricia: Yes." lower 'costs' for me would be to trade the ES at $400 and $3.95 personally, because of the timezone I live in I don't need extra margin to hold thru the week since I can exit a trade prior to the 2pm closing and re-enter the trade after 3pm which may or may not result in an additional increase/reduction of profits while swing trading. and as already stated, Limit Order means no extra B/A spread 'cost' at the end of the fiscal year when I file a tax return, if I've got taxable capital gains then higher 'costs' are beneficial to me since they are a non taxable deduction which reduces the amount of capital gains to be taxed, and increases my net profits if I think my trading profits are going to be higher this year, I'll lease a chart/data feed and if higher still, I'll lease a CQG plus Bloomberg system so those 'costs' will lower the amount of profits that are taxed, but thereby increase my net profits THE bottom line when speculative trading is profits, NOT costs I don't care if it 'costs' me 50 pips to enter the trade if my PROFIT is 100 pips after I exit the trade - at of course a fixed rt commission
It wouldn't be 10 just because you closed it when the spread was 10, it would be a net aggregate between the two spreads on your open and close orders. When you "pay the spread" in spot or futures, it comes out of your P/L of that trade if you use limits or not. The only exception in futures is if you capture it by having someone else pay the spread and hit your order and after the market does not tick past where your order was after all (meaning you literally got high / low tick and were lucky to get the fill before others.) It's not a hard cost listed on your transaction report, but an extra distance price has to move between when you open and close your order. Poor Tricia, gettin picked on by big old Wallace haha.. Sigh, you relapsed on the spread/cost thing again.. and here I thought we made progress. ;P Ok, if we are gonna start talking about taxes and accounting then 'total cost' changes a bit. That's a whole different set of terms, and very subjective since it's based on your local tax codes. One thing you said though doesn't sit right. I'm not sure how things are where you live, but when I file my taxes for business income any additional cost of business reduces my tax bill, but also reduces my net profit in the process. So yes, you end up playing less taxes when your total costs rise (again "costs" from the accounting and tax view since we switched context in your last post) but you also take home less net profit as well. You do not increase your net profit by accounting for more costs as you put it. That doesn't make sense at all. What good is net profit if you spend it needlessly? I'd rather keep after tax dollars (being a percentage of the net profit) than spend that profit on artificial costs that aren't required (in which case I get the item it buys, but not the dollars.) It does make sense to do this when you can write off things you would buy anyway and actually need, like a new trading computer... since buying it with after tax dollars would be silly if you can manage to write it off for business use. HOWEVER buying a bloomberg terminal (as in your example simply because you are making a decent profit in a given year in order to reduce your taxable net income (that's the key, not because you need a bloomberg terminal, but because you don't want to pay a fraction of the bloomberg terminal cash value (cost) to the tax man if you kept it as net profit) seems insane to me. Why would you ever just blow away cash on things you wouldn't otherwise need? Sure the tax man doesn't get his hands on some percentage of your net revenue, but your cut would have been higher if you just kept the dollars yourself. Like, maybe I missed something here...and if so, please explain, because last I checked you had to have revenue in order to write off expenses against said revenue, so any additional costs written down reduces your net profit overall no matter how you slice it. If you think that a "cost" is taken right out of your actual tax owing, then I'm afraid you might be doing your taxes wrong... or do please let me know if where you live the tax codes are actually as such (because I'm moving there if that's the case.)
I was thinking sole income from trading and wrote capital gains. capital gains may be taxed at a fixed rate until they go higher than income. sole income trading will be taxed in tax bands. some info on taxation differences: 'Canadian trading tax': http://www.elitetrader.com/vb/showthread.php?s=&threadid=233666 aggregated spread fee: 10 - 1.2 = 8.8 10,000 eurusd variable spread fee: $8.80 M6E 12,500 fixed rt commission: $1.99 100,000 eurusd variable spread fee: $88.00 6E 125,000 fixed rt commission: $5.94 NinjaTrader chart types: Tick, Volume, Range, Second, Minute, Day, Week, Month Year, Kagi, Renko, Point&Figure and Line Break attached is an image of the NT 1m chart with the gmacd and volume indicators, some MT4 indis have been converted to NT, don't know about Experts also in the shot is the Basic Entry utility set to Sim101 - demo. one feature of the BE is the REV button which is the Reverse, simultaneous Close trade Enter new order in the opposite direction, a fast method of order entry Limit Orders - Type / Limit / Order qty. / then click BUY or SELL and the order rests in the upper BE window until it is filled, can be cancelled from that window
Oh! Good, thought you were posting from the US and I don't know their tax code well enough.. Trading income, if deemed by the CRA to be taxed as your sole income (so like standard income tax with slightly more business-style deductions.. ie, professional income).. is still a progressive tax.. and it's treated very much like income tax (which isn't great,) but since it's progressive that means adding costs (which is a deduction to your taxable income) does not ever increase your total take home pay. It will reduce taxes owing, sure, but spending a dollar to reduce 40 cents worth of taxes won't help you. I'd rather keep the dollar and net 60 cents after my tax bill. It would make sense if you needed to spend on the cost centre anyway.. like the 'new trading computer' I used in a previous example. It always makes sense to write off what you can if you are able to... but not take on additional expenses that can be avoided. Some of the words you said make me fear you're making the mistake of mixing up 'progressive tax' structures with a flat increase in tax rate... I don't think you're doing it, because you come off as a bit more well rounded than that, but just in case, when I say "progressive tax" that means the tax bracket rate you enter is only applied to dollars above the previous tax bracket. When I hear people say "if I make any more, I'll take home less after taxes" it's usually a result of making this mistake. I mean, if that was the case, there'd be no incentive to earn more and you'd want to spend needlessly on costs you can use to write down income...and that wouldn't make much sense. Canadian Taxes for traders are a mixed bag... it's up to CRA's discretion, but there's no hard rule that puts you in one type of tax structure or another. Toss in a shell company and they will trip over themselves on how to properly deal with you. Since a lot of what goes into CRA's treatment of you depends on factors outside of your trading... don't take any tax advice you read online and get a CA to do your taxes. Best decision I ever made, and not nearly as expensive as most fear.
Howdy cross48 are you a beginner? what are you trading? I posted here in June but did not see much in the way of beginning forex daytrading-most of the talk was way over my head. Any beginner forex daytraders out there?
For now I just want forex, maybe futures in the future. Seems expensive with Multi charts. Do you know of better approaches that will accomplish the same outcomes ? Do you of other people using a DOM ? with multiple windows loke 1 min,5min,10min, etc. Thanks for you help and input. Cross48