Any stock traders around? | General financial discussion | Discussion forum

JustMe said

That is full time job. I had some acquaintances who were doing this for the whole year as they somehow decided that 'full time job 9-17' sucks and they lost a bundle... They employed sophisticated software, subscribed for some paid financial sites, whatnot...
Good luck.

I am not investing much into stocks. I just liked the idea and wanted to try it out. So far so good. Yes, there are people who went bankrupt and there are those who became multi-millionaires. It can go other way. I rather none of these two so I am trading carefully and not in big amounts. There is also a stop trail that I can put on stocks to avoid the lost.

Thanks for your wish

Another source:

What you can trade in your RRSP?
Build a diverse portfolio with stocks, options, ETFs, mutual funds, bonds and precious metals. Continually monitor and adjust your positions to smooth your path to retirement.

Also from TD bank: http://www.td.com/to-our-custo.....=e0d990224

Yes, you can buy Stocks, along with Mutual Funds, Bonds and Guaranteed Investment Certificates (GIC) in your TD Direct Investing Self-Directed RSP account. Since it sounds like you may be new to stock trading, I recommend that you visit: http://www.tdwaterhouse.ca/pro.....ices/inves..., and take advantage of the new to investing webinars, educational seminars and online tools to help you get started.

I can find you other sources if necessary

Brimleychen said

Yas,

Just a word of caution: equity risk is much higher than you think, especially in High Frequency Trading world.

That's my first advice I can give after trading for 25 years.

Registered accounts are good for interest bearing products, not very suitable for trading. That's my second.

Thanks for your advice and I appreciate your concern but I think I know what I am doing. There should be a strategy and I am not greedy or careless. I am also trying to be very careful with what I trade. I research first and see what expert think about the specific stock. I buy when I see the market is going up and sell when it reaches my expectation. I don't wait more hoping it goes higher. I also sell as soon as I see it is dropping to avoid the lost. Basically it is a lot of work.

Those who lost money bought stocks and waited for the magic to happen. You can't do that. Let's say stock like Blackberry is down to its minimum. I am going to buy it tomorrow morning considering today's announcement and projects by their CEO. This will def increase their stock price. So for me as soon as I sell as soon as I see $0.50 increase in their $10.50 share price. This is just an example though. I don't wanna say I am perfect but I don't buy because I have money to buy.

Regarding your second advice, yes this registered accounts are not the main accounts I have. I have other registered accounts for RRSP, RESP, TFSA each with their own strategy and making good interest so far. I opened my an RRSP on Nov and from Bonds and Mutual Funds the interest is 6.4% so far. My TFSA is also making 2.5 - 3%. So I opened new registered account with only $3000 and in my first week of trading I gained $1050 but lost $220 and as of now I have 0 stocks on my account

Again, thanks for your feedback but I was hoping that someone answers my question.

James said

I was doing quite well testing day trades a few years ago so I looked into this. From my research, many quoted a value that over 90% of day traders will lose money rather than make a net profit. I could only find a few studies to support this though.

I asked CRA about the tax aspects of day trading. If they determine you are a day trader (based on your volume of trading and how long you hold various investments), capital gains may not even apply and you are taxed fully on the investment earnings at your current tax bracket.

It's worth a call to CRA if you're going to get into this, to clarify your situation and make sure your hard work is worth it to you. Also be aware (you likely are already) of the fees associated with trading often, and fit this into your budget.

Thanks James. But I don't think it is a good idea to call them and ask them to flag my name and pay good attention to it. What comes comes and they can't consider me something not written anywhere. I am also not taking the money out of the account and basically as it is RRSP, they can't tax me for the money locked in my account and yes when I take it out it will be in a lower bracket so no worries but again thanks for your feedback.

Jon said

Just to back up my point.

Here is the link to a previous post.

Thanks for the link and I just quote what Loonie said. Below is a very good argument in legal procedure in case RCA wanted to take my money. I pay more than half of my income on taxes (income and GST / HST) what else do they want from us?!

Thanks for that reference, Bill, to IT 479R. The themes are similar to the other IT, but with even more technical language that I, as an average person, do not understand.
This one too predates the creation of TFSAs by many years, and does not seem to me to adequately address the issues that they present. It also predates the expansion of do-it-yourself investing.
Specifically, paragraph 11, as follows, with my comments underlined.
"11. Some of the factors to be considered in ascertaining whether the taxpayer's course of conduct indicates the carrying on of a business are as follows:
(a) frequency of transactions - a history of extensive buying and selling of securities or of a quick turnover of properties,
There is no definition of “extensive”.
b) period of ownership - securities are usually owned only for a short period of time,
There is no definition of “usually” or “short”. Further, another paragraph says that doing something only once does not satisfy them that you were not trading.
(c) knowledge of securities markets - the taxpayer has some knowledge of or experience in the securities markets,
We are SUPPOSED to have “some knowledge” of the markets before we get involved; it would be foolish not to; and the more investing we do, the more experience we will have.
d) security transactions form a part of a taxpayer's ordinary business,
This is the only one that is clear and a valid distinction.
(e) time spent - a substantial part of the taxpayer's time is spent studying the securities markets and investigating potential purchases,
Financial literacy and good decision-making actually REQUIRE a “substantial part of the taxpayer’s time", especially if you are NOT a professional trader. Do they expect us to make investments WITHOUT spending this time investigating them? It ought to be up to the individual how much time they want to put into it.
(f) financing - security purchases are financed primarily on margin or by some other form of debt,
While best done only by more experienced and wealthier investors who are comfortable with more risk, this is a normal investment activity, and pretty well every book on investments discusses it.
(g) advertising - the taxpayer has advertised or otherwise made it known that he is willing to purchase securities,
What does “willing” mean? Am I “willing” if I am considering such an investment, or am I only “willing” if I am suggesting I will do it on behalf of others or tell them how I did it, or am I just sharing what I have learned? In ordinary speech, everyone knows what “advertising” is, and that should be the decisive factor. This IT predates the internet, and does not take it into account. If I'm not selling my services, then it's not advertising.
and
(h) in the case of shares, their nature - normally speculative in nature or of a non-dividend type.
This could eliminate a very large number of stocks. It depends on how you define “speculative”. Does it mean gold, penny stocks, all or most growth stocks? Which analyst’s opinion shall prevail? One person's "sure thing" may be another person's "speculative" stock. There is clearly a bias in favour of dividend stocks. If that’s what they mean, then that’s what they should say in the first place and save us the worry.
It is precisely because we are not professional traders that we need clear guidelines. Those who know more will probably have a better idea of what these criteria really mean.

Loonie said

I know it's not what you were asking for, but there is a lot of wise advise here, and, honestly, I think you ignore it at your peril. CRA has a lot more power than you or I, and it's a big challenge to argue with them.

If you do find a suitable forum, be aware that participating in it might, in itself, be considered evidence that you are a trader rather than an investor.

As you will see from Jon's last link, CRA's position on all of this is not one that makes much sense to me personally, and I still have trouble getting my head around it, but the only way to avoid trouble reliably is to do your day trading in a non-registered account and pay the taxes. You can also deduct the losses that way. And you OUGHT to then be able to deduct your expenses - computer, internet, softwaare etc. I have not investigated whether this is allowed, but it seems to me they can't have it both ways. If you're a "business", then you have business expenses.

I suggest you read Day Trading for Canadians for Dummies by Ann C. Logue and Bryan Borzykowski (Wiley, 2011). I have not read it, but it is available in most public libraries. The blurb about it says, in part, "This Canadian edition features information on the best online brokerage firms, offers helpful Canadian resources, and covers the unique tax issues Canadian traders have to face."

Thanks Loonie. As this is my first year trading and it might even not be successful I rather not waste time on getting my head bombed with tax related issues. I am enjoying this trading and reading about different companies and how business works rather than making it for the sole purpose of profiting. So if at the end, I ended up paying taxes and consider me a business then I will surely pay the taxes and claim expenses.

BTW, I am not ignoring but I am suspending. BTW, I am going to ask my broker regarding this TAX matters and see if anyone else experienced the same issue.