lol EJ is incredible. so, can you explain why you trade margin positions if you are an expert at eliminating the unlimited loss option from the banks?
Hope this webinar helps some of you...Jan 26, 2015 at 4:15 pm EST for 1 hour Tax treatment for forex and deposit losses after SNB's surprise policy change 26 JAN With forex, you can have your tax cake and eat it too with ordinary losses or lower 60/40 taxes on gains. Jan 26, 2015 at 4:15 pm EST for 1 hour Register Join Green NFH CPA and forex tax expert Robert A. Green in this Webinar. If you are one of many who got caught on the wrong side of the forex trade when the Swiss National Bank (SNB) surprised the markets with a huge policy change, you probably incurred significant losses. In this Webinar, Mr. Green will explain how to handle these losses on your tax returns. He will also explain how you can elect to use lower Section 1256(g) 60/40 tax rates on gains. First, it's important to segregate your losses into two camps: the forex trading loss(Section 988 or capital loss) incurred on your open positions that were liquidated or closed by you or your broker, versus losing a deposit in an insolvent financial institution (Section 165). The latter also happened to traders who made money on this market event. We will also discuss money safety issues for account holders with forex brokers and ways to avoid this risk using other currency instruments to trade. Like trading currency futures on the CME or other futures exchanges, currency binary options on Nadex and other currency related instruments. Many American forex traders disregarded CFTC rules (for retail off-exchange forex) by trading with non-registered offshore brokers offering leverage far above CFTC limits of 50:1 on major currencies and 20:1 on minor currencies. Several offshore brokers and a few U.S.-based forex brokers are facing financial strain or insolvency as a result of offering excess leverage to their customers during the SNB shockwave. We will discuss leverage and regulation.
from https://greentradertax.com/tax-trea...osit-losses-after-snbs-surprise-policy-change Tax treatment for forex and deposit losses after SNB’s surprise policy change January 17, 2015 | By: Robert A. Green, CPA Webinar Monday, Jan 26, 2015 at 4:15 pm EST - Learn More If you are one of many who got caught on the wrong side of the forex trade when the Swiss National Bank (SNB) surprised the markets with a huge policy change this week, you probably incurred significant losses. Here’s a quick primer on how to handle these losses on your tax returns. First, it’s important to segregate your losses into two camps: the forex trading loss (Section 988 or capital loss) incurred on your open positions that were liquidated or closed by you or your broker, versus losing a deposit in an insolvent financial institution (Section 165). The latter also happened to traders who made money on this market event. Forex tax treatment By default, forex trading losses are Section 988 ordinary losses, unless you filed an internal contemporaneous capital gains election at any time before this new trading loss was incurred. In that case, it’s a capital loss subject to capital loss limitations of $3,000 per year against ordinary income. With a capital gains election in place, if you trade major currencies and don’t take or make delivery, you probably use Section 1256(g) lower 60/40 capital gains rates. If you qualify for trader tax status (business treatment), Section 988 losses are business losses includible in net operating loss carry backs and forwards. But without trader tax status, you’ll need other income to absorb the forex ordinary loss, because the negative income part is otherwise wasted. If you’re using Section 1256(g), you can file a net Section 1256 loss carry back election for 2015 to carry the loss back three years to offset Section 1256 gains in those years. (Read more about forex tax treatment in our Trader Tax Center). Deposit loss tax treatment Hopefully, other banks and brokers will rescue teetering forex brokers and not too many forex traders will lose their deposits in insolvent financial institutions. That would be unfortunate since there is no FDIC or SIPIC money-protection on forex accounts. If U.S. and foreign forex brokers fail, hopefully the firms have private insurance that pays out the deposit holders in full for their deposit losses. If there is less than full recovery of deposit losses through insurance or otherwise, sustained losses are subject to Section 165 tax treatment. We addressed similar issues when we covered the MF Global insolvency and recovery efforts over the past few years. Excerpt from our Trader Tax Center Many investors, traders and hedge funds got sideswiped by the MF Global and PFG bankruptcies over the past few years. Unfortunately, futures and forex account holders are not afforded government protection like bank account holders with FDIC protection and securities account holders with SIPIC protection. Tax treatment is far better when the IRS declares the loss a “theft loss”and allows application of IRS Revenue Procedure 2009-20, originally enacted to provide tax relief for investors in the Bernie Madoff Ponzi scheme. Theft losses receive ordinary loss treatment plus acceleration of losses on tax returns. Otherwise, Section 165 applies to deposit losses in insolvent financial institutions like MF Global. Investors are stuck choosing between capital loss treatment, which may trigger capital loss limitations, or itemized deduction treatment with various restrictions and haircuts. Business traders with trader tax status benefit from business ordinary loss treatment. Taxpayers with Section 165 losses must wait for the loss to be “sustained”so trustees have ample time for fund recovery. MF Global futures account holders recovered their losses in full, although forex account holders may have some sustained losses. (Read ourblogs, PFG investors can deduct theft losses on 2012 tax returns with Rev. Proc. 2009-20 safe harbor relief, and MF Global & PFG Best deposit losses have nuanced tax treatment.) I imagine bankruptcy trustees for these failing forex brokers will seek to recover funds from customers who incurred forex trading losses in excess of their deposits, unless the account agreements say otherwise. I also envision there will be arguments over who bears responsibility for excess losses, the broker or customer in cases where brokers liquidated positions and sometimes too late. Disregard of CFTC rulesMany American forex traders disregarded CFTC rules (for retail off-exchange forex) by trading with non-registered offshore brokers offering leverage far above CFTC limits of 50:1 on major currencies and 20:1 on minor currencies. Several offshore brokers and a few U.S.-based forex brokers are facing financial strain or insolvency as a result of offering excess leverage to their customers during the SNB shockwave. When markets are extremely volatile the broker and customer may not be able to exit a trade before incurring a significant loss well in excess of the customer’s deposit amount. Let’s see how the money protection issue works out offshore.
You are looking at the post-positioning, while I was talking about the prepositioning. Here's what it looked like before hand. Even disregarding the prepositioning, people have absolutely no excuse for being caught on the wrong side of it. Everything says it's going down. It even offered a jump on board spot on that last counter-trend rally spike.
Those who engage in prepositioning are usually very well prepared. So here's one I prepared well in advance just for you. As you can see some of us play a different ball game to you. http://www.elitetrader.com/et/index.php?threads/eur-chf-floor.287827/
EJ's claims about pre-positioning are valid only for Planned News Events. However, in this case, it can't be claimed to be a significant signal, I'm afraid, for a somewhat inconceivable and Unplanned event (except of course by the Perps or Insiders at SNB). Pre-positioning occurs in Micro Scalping with the generally planned events, where Market Maker (aka Liquidity Providers) generally position themselves Opposite of the "first move". Just the initial move, as Planned News Events hit. Again, I don't buy it in this case.... HyperScalper