Making 25-50$ a day off 10,000?

[kpx85]

This is more of a question for those out there actively trading. I just barely started buying and selling stocks two months ago. At first I was buying and selling at the wrong times. Buying shares that were cheap and got a few good reviews online without knowing much more. Now instead of losing money I'm at the very least coming out positive on over 60% of my sells (after all fee's).

I was wondering if its unheard of to make... say 25-50$ (on average, per weekday) which adds up to 500$ - 1000$ each month. I know that's a 5-10% gain in a 30 day period and 15-30% for a quarter but is it unheard of for an active trader? Now that I have started to actually gain back some money I lost and really started to enjoy the whole process I have started to wonder about the average's that most come across. Im not starry eyed thinking I will get rich off such a small investment but my interest in growing the amount over a period of time has grown. Any comments?

[Luc1Grunt]

This is more of a question for those out there actively trading. I just barely started buying and selling stocks two months ago. At first I was buying and selling at the wrong times. Buying shares that were cheap and got a few good reviews online without knowing much more. Now instead of losing money I'm at the very least coming out positive on over 60% of my sells (after all fee's).

I was wondering if its unheard of to make... say 25-50$ (on average, per weekday) which adds up to 500$ - 1000$ each month. I know that's a 5-10% gain in a 30 day period and 15-30% for a quarter but is it unheard of for an active trader? Now that I have started to actually gain back some money I lost and really started to enjoy the whole process I have started to wonder about the average's that most come across. Im not starry eyed thinking I will get rich off such a small investment but my interest in growing the amount over a period of time has grown. Any comments?

Those numbers are realistic. You need 25k for day trading status or you will be stuck waiting for settled funds / chasing trades. 10K will work for swings...if you have the patience and a system to follow. Your OP stated "daily".

[aiki14]

I agree with Luc that the numbers are realistic, with the caveat that a prolonged downturn in the market can wipe out a lot of gains. I think you need a few different arrows in your quiver to enhance your chances. A margin account, so you can take short positions is essential, the 25K to give you pattern day trader status, a tax strategy so you don't give back the gains at 35%, and level 1 options to take hedge positions.
If you go in just taking long positions, and waiting for T+3 settlement, it will be very difficult, in fact quite unlikely, you'll see those type of gains on average over a long time frame.

As an aside, it's nice to see you're enjoying the process, and I hope that continues. I have found it a real rush to make money trading, especially when going against trends. Here's to your continued success and welcome to the forum.

[Luc1Grunt]

Fill your cup one little drop at a time.

Be patient with small bits of growth.

Ruthlessly enforce stops.

Exits are more important than entries in 99% of the trades.

Calling tops/bottoms/reversals will slowly grind you to blow-out ( or close to it).

Shorting is half of the market....you need the margin.

[GenNove]

But how would you get paid?
the 1k a month you have t osell your shares right?

[Luc1Grunt]

? Say again all after...."How....."

[spanky]

... a tax strategy so you don't give back the gains at 35%

Aiki, would you elaborate? I'm interested in what you would have to say on this. Thanks

[Luc1Grunt]

Trader filing status allows Mark to Market as opposed to wash sale

LLC allows the business expenses

Treat ALL trading expenses as business expenses to include internet, platform, magazines, home office, sexitary named Brandi etc.

[aiki14]

Aiki, would you elaborate? I'm interested in what you would have to say on this. Thanks

If you're a buy and hold type, hold your wins a year and a day, sell your losses a day short of a year. Long term capital gains are taxed at 15%, short term as regular income. All options gains are Long Term even if you hold them a day.
Also it is key to remember the tax man when you evaluate your strategy for trades. Remember the wash rules especially if you are in and out of the same position frequently. If you have a win and a loss on the same stock in 30 days you cannot declare the loss on your taxes, thus your win is taxed at your rate and the loss cannot be written off against it.

http://www.smartmoney.com/tax/capital/index.cfm?story=washrules

[optiuser7]

From all the above posts , I have the following questions :

1.As a new trader , I have long as well as regular trade but I wudn't call myself as a active day trader yet.
2. I have cash account only with discount broker.

So say if have made gains around $500 in two months , do I still owe a 35% tax of that 500 I made if I did not incur loss at all ???

3.Also if a person has a regular job and still does perform day trading , how does it count towards tax , since this will be an additional income ?

[aiki14]

From all the above posts , I have the following questions :

1.As a new trader , I have long as well as regular trade but I wudn't call myself as a active day trader yet.
2. I have cash account only with discount broker.

So say if have made gains around $500 in two months , do I still owe a 35% tax of that 500 I made if I did not incur loss at all ???

3.Also if a person has a regular job and still does perform day trading , how does it count towards tax , since this will be an additional income ?

If you cashed out a gain it's taxed as regular income (at your regular rate) unless you held for a year and a day or more, at which point it's long term capital gains and gets the special tax treatment. Day/active traders who file as such with the IRS can get some breaks but you really have to go through a few hoops to get the status.

[Luc1Grunt]

From all the above posts , I have the following questions :

1.As a new trader , I have long as well as regular trade but I wudn't call myself as a active day trader yet.
2. I have cash account only with discount broker.

So say if have made gains around $500 in two months , do I still owe a 35% tax of that 500 I made if I did not incur loss at all ???

3.Also if a person has a regular job and still does perform day trading , how does it count towards tax , since this will be an additional income ?

Great post by Aiki.....

Let me add some "advice".

If you are new, concentrate on making your trading a success. You will pay your current tax rates on those short term gains as they are income.

If you think you are on a curve to produce nice gains, the easiest thing you can do is raise your witholdings at your current employer. You have to consider the estimate based on your gains, tax rate, and current witholdings. Say from M2 to M0 or S1 to S0 (withold extra _____$)

As you steadily become constistently profitable, consider researching LLCs, Active trader status. I am assuming you are not quite there yet?

Remember, if you are in a 21% bracket, your taxes on a $5,000 profit year (short term gains) are $1050. This is before any deductions of course, but plan accordingly. Maybe "withold extra $21 a week from your paycheck. Adjust based on time and paycheck(s) left.

If you are a little more aggressive and have the financial discipline....Push the gains into a solid money market, draw that interest, and then pay the IRS on 14 April.

[bobwatford123]

That U.S. tax rate for 'short term' holds is awful. In Canada, unless you are a blatant daytrader flipping hundreds or thousands a time a year and don't have any other job or income you can trade and you just pay half your income tax rate on all gains. No short term or long term time frames. It would be tough to flip in the U.S. and make money with tax rates that high on gains. I rarely if ever hold a stock for a year. Ohhhh Canada ;-)

[Luc1Grunt]

That U.S. tax rate for 'short term' holds is awful. In Canada, unless you are a blatant daytrader flipping hundreds or thousands a time a year and don't have any other job or income you can trade and you just pay half your income tax rate on all gains. No short term or long term time frames. It would be tough to flip in the U.S. and make money with tax rates that high on gains. I rarely if ever hold a stock for a year. Ohhhh Canada ;-)


The media in the US has effectively passed the message that "capital gains" refer to the "rich". It has almost become synonymous. Many folks do not realize what capital gains really are. Of course I don't hear the outrage all that often on the exceptional gas taxes, cigarette taxes, state sales taxes that pound the so called "middle class"

"Tax cuts for the rich" comes to mind when it has saved the middle class many monies in selling homes, etc., etc., etc.

[freakscene]

Can anyone elaborate on how an LLC can be used for tax benefits for trading? I am about to create my own LLC for Real Estate holding (rental units), and I am curious as to how that may benefit me trading? Or did I misinterpret what i read?

Thanks in advance

cheers

[theticktrader]

Freakscene: You have alot of tax advantages trading in an LLC, opposed to an individual account.

I daytrade futures using an LLC. I have a very "tight" accountant who does not fudge! That said, I write off EVERYTHING.. I bought my car in my LLC name and I rent my office space. Cell, lunches, everything else is a write off.

Alot of us here I am sure like to attend some of the trading seminars around the country - that is a write off for an llc.

PM me if you have any more questions....

Good Trading
DM

[theticktrader]

KPX: just like everyone else stated, it is very plausible to do what you are looking to do. Your looking at .5 a percent per day. Honestly, I think you can do better: 1 - 1.5 percent.

As you skills grow, you ought to be able to get closer to 2 percent.

Good Trading
DM

[Luc1Grunt]

A good post for Nike.

[Luc1Grunt]

pop

[Keventerprises]

Doesn't running your trading income through a business make you liable for Social Security at about 15%, if you show a profit. Overall the benefits of the extra write-offs would probably more than offset this added burden, but isn't that the way it works vs. passive (non-business) income?

-Kevin



Trader filing status allows Mark to Market as opposed to wash sale

LLC allows the business expenses

Treat ALL trading expenses as business expenses to include internet, platform, magazines, home office, sexitary named Brandi etc.

[Pinguin]

If my memory serves me you are limited as to what you have to pay in the terms of "benefit" taxes until you get over the 50 people threshold. This is a vague recollection from some hr classes I took many years ago.

[Luc1Grunt]

But how would you get paid?
the 1k a month you have t osell your shares right?


2 posts and then left the board.

GenNove...did you get your answer? Figure out those flashing green and red letters and bars on your screen yet?