Day trading penny stocks to minimize proposed transaction tax

Discussion in 'Trading' started by TradeCharts, Dec 1, 2009.

  1. I used to trade high price stocks like CME, GOOG etc to have my favorable commissions. With the inevitable transaction tax, I want to day trade penny stocks to minimize the transaction tax. I am wondering the following questions:

    (1). What is your favorite broker in terms of commissions and execution.
    (2). How to select penny stocks.

    Thanks for your reply

  2. tortoise



    never thought of this potential side-effect of a transaction tax -- diverting capital to cheaper stocks, aka, stocks of companies that the market has decided aren't worth very much.
  3. No one knows the mechanics of how this transaction tax will be implemented, if it ever is. How would this reduce your transaction tax burden?
  4. Moving penny stocks generally give larger PnL percentage wise.
  5. tortoise


    well, it wouldn't, in aggregate, if it were a straight percentage.

    based on the op's query, however, i wonder if the idea of cheaper stocks = lower tax, however specious in practice, may have some allure
  6. So the transaction tax will drive traders to higher-risk vehicles in an ill-fated attempt to have the same returns as they had before.
  7. rwk


    I agree totally on both counts. Under the proposed tax, your total tax would be based on the value of the stock and the frequency of trading. With lower priced stocks, presumably you would trade more shares.

    I think it is way too soon to start planning contingencies. It is my understanding that the author (DeFasio) has introduced this measure in every congress since 2000. When it comes to writing the final legislation and implementing it, I believe saner minds would realize what a can of worms it is. The two biggest gotchas are: a need to exempt market makers, and a need to prevent trading from moving to tax-free jurisdictions.
  8. jksn922


    The only way this tax would ever be implemented is if there were unanimous agreement internationally with the G-20/IMF. At the last G-20, Geithner stated that the U.S. was against this tax, as was Canada & Russia. Even though there is a lot of talk about this tax, especially among douche bag liberal economists, liberal politicans, etc..., the odds of this tax becoming a reality are slim. The U.S. is in discussion with the IMF to levy insurance type fees on the banks, in order to avert another potential crisis. The U.K. is adamant about imposing a Tobin Tax, but the U.S. will never agree to that, especially when the U.K. Prime Minister Gordon Brown is certain to go down in his defeat come re-election in June 2010. The conservative party candidate expected to defeat Brown, David Cameron, has stated he is opposed to a Tobin Tax. Sure, all of these liberal, Havard asswipe economists will still advocate for this tax, but in the end it won't happen. We are now starting to hear from conservative Democrats in congress coming out against this tax. Once this talk eventually dies down, Defazio will crawl back into his hole, and will no doubt draft another transaction tax proposal, which will end up in the trash, just like all his previous proposals. :D
  9. lindq


  10. Now penny stock investment is a big source for income. It is very risk business. While investing in penny stocks consider on the company’s information such as pay attention to the company’s offering and see if their product or service is different from what other companies in the industry.
    #10     Dec 19, 2009