Daytraders in stocks will have to move to daytrading futures as in futures the impact of the tax is small. I lose between 2% and 15% of my net profits. Depends on the market conditions as winning rate and average profit and loss per trade can vary a lot.
The link in my original post, Ken, shows that Kamala wants only a 0.0002% FTT on derivatives, which is pretty tiny and might be totally acceptable to daytraders. Futures are derivatives, right? That's a pretty tiny FTT. Perhaps we could all migrate to futures? Maybe that's what the elite want? Perhaps they want all of the daytraders out of their party-like stock market so they can have it all to themselves, and they want to push us all into our own little "room", where we can all trade futures? Things that make you go "hmmm."
The "rich" will have to pay the FTT too, not? So they will have the same cost/problem. Which means that what you say would not be true. If the Democrats want to make the rich pay and support the poor, why do they want a FTT? Because according to your logic they make the rich richer and the poor poorer? I think that only the HFT will be hurt hard. And as the HFT are rich and powerful, they will block the introduction of a FTT.
An important consideration in this discussion is that HFT accounts for over 80% of volume in US mkts, whereas in Europe (where FTT exists) HFT only accounts for 20-25% of volume. What is the fallout for HFT under a FTT here in US mkts? Anyone have links to studies or papers on this topic?
The issue of FTT is something I’ve been worried about for years but glad to see other starting to catch on to the issue. I’ve been researching this for some time. But the highlights are as follows. It would kill day trading. If you are currently day trading and your average trade (when you add up all your winners and losers and take an average) is still greater than 4 or 5 ticks, which would amount to about 50 ticks profits every single day doing 10 trades a day hats off to you, you’re at HFT level of profitability. Anything less than that and you’re out of business with an FTT. And even if you are at that level your revenues have been halved. But also there are huge real world reasons why we trade futures. It’s not just for speculators. Producers of commodities are using futures to hedge their exposure (usually trading spreads). Their hedging costs will go through the roof. Both with the tax and lack of liquidity as day traders leave the market. Who do you think will pay for the extra cost at the petrol pump or supermarket. The consumer will. FTT has been enacted in several countries. In every single example it raised a fraction of what it was supposed to as trading basically stopped. But will this mean politicians see sense and stop something like this going through? I doubt it, left wing populism has never been more powerful. Only ways to avoid it are to find an edge swing trading...I’ve been a professional trader for 13 years and never met anyone that had an edge swing trading. All the edges I’ve ever seen have been reacting to news, arbitrage and order flow trading which doesn’t apply to swing trading. Or, you trade non US exchanges. But there’s a chance that won’t even work as in theory they could charge the tax on any trade made in America. Not just on an American exchange (in the U.K. the left wing Labour Party tried to propose that at the last election. Thankfully they got smashed at the ballot box) So basically either find a swing trade edge or vote Republican if you are a profitable trader.
Thank you tommo. Your reply makes sense, and reflects the time you have spent researching the impact of a FTT. Not sure what the eventual fallout will be, but I do NOT believe a FTT is currently on WS's radar. Identifying if/when that is likely to happen will be key to avoiding the initial fallout.