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I am not overly familiar with US tax law with reguard to invesment income, but i beleive capital gains are fully taxable. It is up to the individual taxpayer to report all sources of income.
All income is reportable and therefore taxable, including investment income. There may not be a source deduction, but investment income is taxable.
In Canada, we have a capital gains exemption, where capital gains are only 50% taxable.
However, it could be argued that a pattern day trader is generating income from his activities, not capital gains, and therefore, the capital gains exemption does not apply.
If you make 10,000 a year for your investment account, I doubt there would be much inquiry. Multiply by 100, and i think Canada Revenue Agency would have something to say....Think audit.
"Yes i made 1 Million on my day trading account, but I am only want to pay tax on 500,000 because it is a capital gain."
Volume footprint impression from Rancho Dinero. I dont use it for entry and exits. Today was an excellent example just before the open or RTH on CL.
8:45 am, I was paying attention to where buyers were holding off sellers, had one sell flush down, but then volume came in on the buy side preventing price from going lower. On the 5 minute, i see that as long bear tails. But on smaller bars, or on thinner volume, it is a little hard to see on a 5 minute.
I was on the Suri Dudella webinar on futures.io (formerly BMT) on Saturday.
It was very well done, Suri knows his stuff, and was very convincing. If you learn how to trade patterns like he suggests, and of course, adapt it to your own style, instrument and temperment, you would be wildly successful.
Of course, in addition, you would have to control your risk, have good money management, and a set of trading rules that are repeatable. Of course, not too many rules, so that your buy or sell signal comes up so infrequently, you inevitable go off the reservation, and do something completely contrary to your rules.
Once you get all this in alignment, you would have to be ABLE TO PULL THE TRIGGER ON THE TRADE WITHOUT HESITATION. Suri might sit all day without taking a single trade, because his criteria isnt met. And, admitadly, that is the exact time that he breaks his own rules.
The webinar inspired me to review my own trading rules differently. Instead of just reading them over daily, I am going to rewrite them ( there arent that many). I think that it will serve to help reinforce them in my mind while I am trading.
I have to do this anyway, because creating and sticking to ones own rules is the cornerstone of successful trading. Doing the same thing over, repeatadly, will help you to discover areas where you can improve. If after numerous sample, your best trading is from from 9 to 11, then trade that time frame only. Write down every single trade. If your criteria is the same on every trade, and you are not profitable, then you know you need to make an adjustment.
But if you dont know the why, you can never figure out how. And thats what we are all trying to do. Find out how to trade profitably with consistency.
When planning my trading day, I look at the overnight range, overnight volume, particularily around the open of Asian market. in adtiion, I try to get a sense of what direction price will move at the open. 1/2 hour before leading up to the pit open may give some indication as to where price may migrtae.
This morning looked like a double bottom with some congestion, so I went long right at the open. Price had been reluctantly trending down from 7:00am, but the last half hour leading up to the open, price began to consolidate. I was ready to buy faily cloe to the open, if I saw we had a clear price break higher.
Shorted the double top when price failed to break higher ( Brooks...80% or all breakouts fail...Saw his webinar this afternoon on futures.io (formerly BMT))
Shorted at 1106 at 7882. A little late on that trade, missed around 5 ticks as price collapsed on me. I was strategising on calculating my stop loss above the resistance when it broke down, so I bought at the market. Was a bit fortunate, as i was expecting it to fall. With such a collapse, was thinking price may challenge the LOD of yesterday. Kinda got away with one here.
Congested are till around 11:15, looked to form a potential triple bottom. Of course, again the book says most reversals fail.
Price got to the LOD, which was the POC area from yesterday, I was looking to swing trade long. Stayed with it right into the close.
At 1:32:34 went long at 7882. I entered on the bear bar. Spike down to previous DB of 7875. SL at 7867, trend is up, and this was the completion of a 2nd leg down to slightly overshoot the trend line.
Last trade was the trade of the day.
4 snapshots today. only can take them when there is room. If the trade is ahead of my second target bu=y a good margin, and I have set my trailing stop, I can take a screen shot.
7 trades...1 premarket, which was a loss. -15 ticks.
It was a good day today. I felt I managed everythinikg pretty well. Even my first losing trade was a good trade that just didnt work out, so I am pleased with it.
I am trying to trade in the moment. in other words, I am concentrating on making each and every trade on its own individual merits, and not let the previous trade have any influence on the next trade. After all, the market dosnt have a memory.
Yesterday, once I saw support, 7850-7885, I was only looking to go long until price told me differently. I was only looking to go long off the trend line I drew off the lows.
The last 4 trades really could have been one trade. Had i set my SL with more room, a runner would have survived into the close. Its an area I am continuing to work on.
A couple of thoughts that I am also keeping in mind.
Each and every trade comes at an emotional and monetary cost, therefore, I must do my utmost to insure that the trade has the very best possibilty for success.
View every trade as the markets attempt to take money out of my pocket.
Maybe a little cliche, but it helps me to maintain my focus.
