Vantage Point Trading
One of the biggest plusses that the foreign exchange market offers traders consists of the fact that currencies trade twenty four hours a day, five days a week. However, at some point, traders must learn how to account for their trading activity and how to file taxes-hopefully filing taxes is to account for forex gains, but even if there are losses on the year, a trader should file them with the proper national governmental authority.
The reason for this is most broker seminars either just give you trading advice you already know like – cut your losses and run your profits, with no real insight on how to do it or give you advice which will see you lose like – how to use strategies that don’t work like how to day trade and scalp the markets successfully but as you will read in other areas of this site, day trading strategies and making money are a not compatible – its a losers strategy.
The most popular robots have been coded specifically so that they can function within the well-known Metatrader 4 trading platform These tools can then be operated as expert advisers which can perform a variety of actions automatically, such as identifying new trading opportunities, executing and exiting positions, placing stop-losses and safeguarding your trading capital from excessive levels of risk, etc.
This is what we Lazy Traders do. If this is the case, then trading the daily, weekly or even monthly charts will be the ace up your sleeve….Or you may be the type of person who would rather intra-day trade by going in and out of the market as and when there are opportunities on the smaller timeframes, such as the hourly or fifteen minute chart.
In lieu of identifying each trade in books and records as not subject to Section 988 and attaching a verification statement to each year’s tax return, the tax regulations provide if the taxpayer receives an independent verification of the election from his or her trading firm, the taxpayer will be presumed to have satisfied the identification and verification requirements.
If the trader executes a long trade of 50,000 units (or 0.50 lots in the MetaTrader4) in EURUSD, what is actually done behind the scenes is that a loan is given to trader by the forex broker for the trade (known as the leverage) and the total amount is then converted into Euros.
Because these daily fluctuations can be considered part of a trader’s assets in the normal course of his business, the IRS gives the trader the option of rejecting (opting out) of Section 988 and electing that the gains be taxed under the favorable 60/40 split of Section 1256.
ADVISORY WARNING: FXDD provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information.