I just sent my first deposit check to Oanda last week. I’m really excited to start out for real. Been demoing for just shy of a year (~10 mo). Does anyone know about the whole tax requirement?
I’m trying to determine whether or not I would have to file for taxes with trading if I end up making some money prior to April 15, or is it not a factor? I may hold out till then if I do.
I am starting out trading as just a supplement. My original plan was to deposit 5k and use 2% for s/l. Now I have decided to do 1k and 1% loss for starting out. Mainly the change is due to not as much money as I had planned for, and reading some blogs where it seems 1% is more common. I will probably raise it to 2% at some point, but right now I just want to get my feet wet with live trading.
Congrats! I’m also about to open an account with Oanda soon, I wish you the best of luck. As far as taxes go, if you anything under $1000 don’t bother reporting it to the IRS.
Viper good luck!!! I think 1% is great after all this is a marathon you are running not a sprint. Just remember trade your plan and keep your emotions out of it. You never need to seek revenge on the market, learn to cut your losses short with real money. Its not as easy as on demo. Keep a level head and you will be just fine and sooner than you think you wil have a super huge trading account.
1% risk is best. I find 0.5% is best for me. If you want to make more money then deposit more money as equity, rather than risk more percentage wise. This seems to me to be safer.
Any money you make prior to April 15, won’t be reported for the one that’s due April 15, but rather next year. The one you’re filing this year was for last year’s income.
I’m no authority but I think what is most important is paying taxes on profits you withdraw from your account not so much as what you make. If you pay taxes on your profits and leave them in your account to trade with, but instead end up losing them…will the IRS to give your tax money back to you?
I think the traders that begin making a lot of money use corporate structures to trade in. Lots of benefits there. I guess we need to hear from someone that has gone down this road.
Any money you earn whether it be big or small should be reported on your taxes. You don’t need to report money earn for April on this years taxes. In fact you have a 2 year leeway to report on your taxes. I would suggest you start a corporation as stated above and get yourself an accountant if and when you decide to do this full time. I would also like to say good luck with your trading. Surprise you waited 10 months. I would definitely follow Synergistik advice when you decide you want to make more money. Also you need to remember to have discipline and don’t let your emotions get in the way. For some reason people go on gut feelings instead of following their strategy when the first start out with real money. Hopefully that won’t be you.
I’m not sure what syngergistik was suggesting with the equity and all. However I did want to post that I made my first real account trade earlier.
I shorted EJ at 126.60. It seems to be working out for me. I’m currently at 1% of my account. It’s nice to have a winning trade as the first one and I’ve already locked in a very small amount of profit should the market decide to reverse. I would have actually gotten in it a bit earlier, but I didn’t see the opportunity until I made the trade. Nonetheless, it still looks to me like it’s going to drop a bit more, at least to the 38% fib for H4.
As far as my style of trading goes, I usually do H1 or H4 with an occasional M15. As mentioned previously, I am going for 1% per trade. Whenever I make a trade, I will usually make two but each one is half of where my 1% would be if my s/l is hit. So right now that equates to me having .5% of my account size per trade (2 total) that I have active. I like this for several reasons. One is that I can close profits easier and it is easier for the mental aspect. Additionally, it is also easier to let a trade run once your first t/p is hit. I pretty much started going off how people do it in their blogs (i.e. tp1, tp2).
I use s/r, trendlines, and fibs. Occasionally, I will use stoch and macd to confirm. I wouldn’t say I have a trading plan persay, but I do have money management in check and I think thats more important. I just go with the trend when it looks strong and will likely continue, hence the EJ trade.
As I’m writing this, it appears that my 2% mark will be hit. Therefore I will close one out at 1% and let the other one ride.
I was saying that if you have more money you can make more money. For example , if you make a profitable trade that earns you a return of 1% of your account, had your account been $10,000 as opposed to $100, you’re profit in dollars would have been 100 times greater. Same percentage profit, but different amount in dollars.
Oh…ya. I didn’t realize thats what you meant, but reading it again I can see that.
I ended up exiting my other half since the market looks like it may want to turn around. I really thought it would go further down without resistance, but it is what it is. I still think it will continue, but I didn’t want to get greedy and have it turn around on me. In retrospect, I probably should have closed half of my position (.3%) and let the other ride. I’ll take my profits
So summary of my first trade is:
short ej at 126.60
tp1 126.17
tp2 120.30
total profit - 1.6%
If the current candle closes below the low, I may add on another trade.
Keep it up! Sounds like we see things in a similar light, biggest rule for me was don’t be greedy. I read somewhere about getting your profits in the middle, avoid the top and bottom 25% and go for the middle. Sounds like a lot of new traders try to get the very top and bottom to get all the profit and end up losing money on a quick reversal.
It is motivating for me to see a new trader getting out there and making this Forex thing work. Next month will most likely be my first live month so I will be watching you new live traders to learn some last minute lessons. Thank you for the post. Good Luck.
I find it a lot easier to let it ride if you already have profits off the table. That is, to close a trade partially and see what happens to the rest. At that point, I usually move my stop to break even so I am in a position to either let the trade run further and make more money, or have the trade come back and close out at a break even. Either way, I still make money because of closing the first part initially. It makes being greedy a whole lot easier because it’s a win/win and you don’t have to worry about a once winning trade going back to a loser. You should try it if you haven’t already. You’ll be amazed at how you can still be “greedy” and have winning trades.
I have been learning trailing stops as a method to be greedy with less risk. It sounds like what you were talking about but a little more automated.
I have heard others talk about partially closing a trade, what does that mean? I sometimes have 2 trades open and close one at a conservative profit target and let the other one run with a trailing stop following it to see where it goes. Is that what you mean or is there a way to incrementally close parts of a trade?
There is a way to incrementally close a trade. For Oanda, you just do the opposite of what your active trade is (short for long trade, long for short trade) for the amount that you wish. You will see your active trade units go down unless of course you short or long greater than your active trade. For Mt4, you just close a trade at a different unit value. Creating a new trade in mt4 will only make a new trade and not reduce your existing one.
I personally don’t like trailing stops because I can’t find a good amount to trail by. Also, most of the time candles will have wicks on either end and then your trailing stop will be hit. I just don’t think it provides enough room. I like the idea of just letting it run and do its thing and having a single price that exits me out of.
