Going offshore to escape the CFTC

[JerryRay]

Clint & HyperScalper,

I really appreciate all the info you guys have added to this thread over the years. I’ve been trading a couple of years and still find I’m green behind the ears in areas I thought I had learned everything I needed.

Over the past several weeks I’ve been going through old posts, and found what I had been told about taxes seems to be wrong. In fact a prominent east coast tax business told me several months ago it was illegal to trade offshore, and then I came across this thread.

This same tax specialist told me I had to split majors into a separate trading account in order to get the 60/40 tax treatment. Is there any truth to that? Is there another thread to speaks to these subjects?

Thanks,

Jerry

[trey1975us]

I’m not sure why you need anyone with offshore specialization… After all, revenues
are simply reported to the IRS and once you set up your “corporate entity”, depending
upon its status… then wouldn’t the focus be on properly setting up a "trading entity status"
for that, for tax advantage ?? I just don’t see how there’s any relevance to the fact that some or all
of your brokerages might (or might not) be offshore… I could be wrong. Just my 2 cents.

When are you quitting your “day job” ??

hyperscalper

Hyperscale,

This is actually my point of wanting to find a tax attorney. Now that I know that I am “legal” thanks to this board, I am looking for advice on how to structure my business and report to the IRS in the most efficient manner. Do I setup an LLC? Do I setup an S Corp? If I am only reporting the bottom line profit and loss in the tax return (as was mentioned previously in this thread), then how can the IRS tax differently for the majors and minors? And regarding quitting my day job… latest by Christmas 2017 :53: (Apologies if I am taking this thread off topic and I will be happy to take it elsewhere if need be.)

[Clint]

■ Later today, I will clean up the List (remove all the previous red ink).

■ Also today, I will add [B]Finpro[/B] to our List, in the Europe category. Finpro’s listing will look like this:

• [B]FinproTrading[/B] (UK)

Type: STP/ECN. – Regulator: not regulated. – Segregated customer funds. — Accounts: standard, Islamic, and PAMM.
Other products: commodities, stock indices, shares, ETFs, and bonds.
Platforms: FinPro Station (including Web and Mobile), MT4, Zulu Trader (Web and Mobile).
Min. initial deposit: 100 USD (STP accounts), 200 USD (ECN accounts). – Max. leverage: 200:1.
Min. position size: micro-lot (0.01 std. lot).
Spreads: EUR/USD: 0.3 pip (average), GBP/JPY: 1.4 pips (average).
Website: Finpro Trading | A Leading Broker for Forex and CFD with over 1000 instruments
Email: <[email protected]>
Telephone: +44 79 6137 9058, or +44 20 3289 3467 (UK)

Note regarding Finpro spreads:

In the Finpro listing, above, I have shown the spreads posted by HyperScalper in his very detailed comparison of Finpro and Trader’s Way. But, I’m confused by the table of live ECN spreads shown on Finpro’s website — 4 pips for EUR/USD? Really?

Here is a screen-shot, taken this morning —

■ Regarding [B]LMFX (Macedonia)[/B]

This is my second request for information/comments/votes on the question of designating LMFX as a Trusted Broker. So far, we have gotten comments from two members, one of whom trades live with LMFX.

If you have something to say on this question, please speak up. Thanks.

More, later.

.

[Babypipsrocks]

Morning guys,

I can speak of LMFX only, because I don’t have an account with Berndale Capital. I don’t know how a broker can be qualified as a member of Group 1 in the thread, but I am very pleased with the services offered by LMFX. Everything appears to be professionally done and the whole backend which they call Connect is very interesting. I haven’t experienced any issues so far with their platform. Customer support is very friendly and helpful. If you are interested in other specifics I will try to find out the information.

Clint- I’m glad you pointed out that a trusted broker doesn’t necessarily need to have the best spreads and etc.

I do believe as far as we’re concerned accountibility, as in they participate in this tread answering any questions and issues we may have seems much more valuable to me.

I have an account with Tradersway, Tallinex, FXchoice, ForexBrokerInc, and had not considered LMFX until after the recommendation from Jack72 and also until after I saw LMFX start to actively address issues some of our readers were having.

I do have a live account with LMFX and have been using them daily without any issues and I believe they should be given trusted broker status as long as they continue to address issues our readers bring forward. (As Paul with Tallinex has done)

[jaredt]

I really appreciate this thread. I’m in Canada and surprised to see a bit of talk about moving here because the situation is even worse here, at least for smaller retail investors. In the province of Alberta and maybe some other provinces (I think BC is bad too), unless you have income of $200,000 and financial assets of $1 mil or net worth of $5mil, you cannot trade Forex at all with local brokers. Thanks, nanny state. So I signed up for FxPro for a while, but they just dumped Canadian residents Mar 21, and are giving us until Apr 21 to close our positions. They gave some vague handwaving reasoning about focusing on their core markets but I suspect it might be government regulation garbage. So I plan to try the trusted brokers here. I value this thread but wish there was a larger pool of traders vetting brokers. Maybe this should be turned into a full website “offshore broker review” or something.

Q: How the heck in our western “free” world do we let our nanny and/or corrupt governments control us like this when doing legitimate activity, forcing us to scurry like criminal tax evaders to companies in postage stamp sized countries with shady maildrop addresses? A: We do not value freedom enough. A2: We need to have a Braveheart moment and petition and find some way to help our governments see the light CTFC and all of its similar tentacles in other countries. I am a polite Canadian so I suggest petition. I will leave it to the Americans to suggest more literal interpretations of Braveheart.

[Clint]

[B]LMFX (Macedonia)[/B]

I do have a live account with LMFX and have been using them daily without any issues and I believe they should be given trusted broker status as long as they continue to address issues our readers bring forward. (As Paul with Tallinex has done)

Thanks Bpr. I appreciate your input.

Regarding your last statement, I tend to disagree slightly. It’s great that Paul Cullen (representing Tallinex) is an active participant in this thread. But, I don’t consider his participation a [I]necessary condition[/I] for Trusted Broker status for Tallinex.

Likewise, it’s great that Maria and Mr. Videnov have introduced themselves here, and offered to answer any questions we might have regarding LMFX. But ultimately, we will have to judge LMFX for Trusted Broker status based on a cold, hard look at how the brokerage operates, not on the friendly conversations we have had with LMFX personnel.

We have two other Trusted Brokers (FX Choice and Trader’s Way) which do not participate in this thread, at all — although they both participate elsewhere on the Babypips forum. I hope that reps from those brokers will consider participating here in our thread, at some point in the future — but, their Trusted Broker status is not in jeopardy, if they choose not to.

[B]Berndale Capital (Australia)[/B]

The Berndale website is down. Is this just routine maintenance and updating — or is something else going on? Does anyone have any information?

[B]The Offshore Broker List[/B]

The List has been updated.

.

[Clint]

I really appreciate this thread. I’m in Canada and surprised to see a bit of talk about moving here because the situation is even worse here, at least for smaller retail investors.

Hello Jared. Welcome to this thread, and welcome to the Babypips forum.

I agree with you on the situation in Canada. I have some connections in Canada, and I know what you are talking about.

So I plan to try the trusted brokers here.

I don’t think you’ll go wrong with any of the Trusted Brokers in our thread.

I value this thread but wish there was a larger pool of traders vetting brokers. Maybe this should be turned into a full website “offshore broker review” or something.

I’m glad that you find value here.

As for a bigger internet presence, I disagree. We are right where we belong, in my opinion. Babypips runs a tight ship, and doesn’t tolerate trolls, advertisers, or scammers. Those reprobates can be found disrupting and polluting less “regulated” sites. (Can you believe that I’m speaking highly of regulation?)

Anyway, my point is this: The relatively small group of active (voting) participants we have on this thread comprise a group worth listening to. I’d rather hear from a few of the guys and gals on this thread — rather than from a larger, more anonymous, less-well-known group of people, who may be joining our conversation with their own agendas.

…forcing us to scurry like criminal tax evaders to companies in postage stamp sized countries with shady maildrop addresses?

Size matters is some things, but not necessarily in a broker’s country of domicile. An honest broker, operating with the highest ethical standards in a tiny country like Dominica, where forex brokers are not regulated, is a safer place for your money than with a wheeler-dealer in a big headquarters building in Manhattan.

We need to have a Braveheart moment and petition and find some way to help our governments see the light…I am a polite Canadian so I suggest petition. I will leave it to the Americans to suggest more literal interpretations of Braveheart.

There is a seething undercurrent of contempt for the Ruling Class in the U.S., and it runs wider and deeper than the Ruling Class can even imagine. That contempt explains the Donald Trump phenomenon. The Ruling Class keeps asking, 'How can dumb American voters support an obnoxious bully like Donald Trump? And the answer is, ‘He’s [I]our[/I] obnoxious bully — and he’s going to dismantle your dictatorial Ruling Class.’

Even when this is explained to the Ruling Class, they can’t comprehend it. The next 9 or 10 months are going to be very unruly in this country.

See there? — Your post made me get on my soapbox.

But, I’m going to quit now.

Thanks for your post. And welcome.

.

[compounder]

I could very well be wrong, but my “gut feeling” is that no Trusted Broker vote for any offshore broker should be accepted yet until the voter has had at least 6 months of live trading experience with the broker. That includes LMFX. If the broker really is good, they can wait to be approved.

[Clint]

[B]TradeWiseFX[/B] (SVG) — accepts U.S. clients.

TradeWiseFX | ECN/STP Forex Broker | Trade Forex Wiser

Their rep has been posting in the [I]Broker Aid Station[/I] forum for a little more than a month.

I haven’t looked at this broker, and know nothing about them.

.

[TradeWiseFx]

Thank you for the mention Clint and as you noted yes we accept U.S. clients. For more information you can contact us directly or go to our web page.

[Clint]

Thank you for the mention Clint…

Welcome to this thread, TradeWiseFX.

Are you Nasir Lakhany? (We like to address people by name, whenever possible.)

.

[Clint]

The Berndale Capital website is still down.

I have sent an email to Berndale, asking for information.

Are there any Berndale clients currently reading this thread who can tell us what’s going on?

.

[TradeWiseFx]

Thanks! Yes I am and represent TradeWiseFX. Although, we may at times have other representatives on the forum who will answer you as well.

[jaredt]

@Clint

As for a bigger internet presence, I disagree. We are right where we belong, in my opinion. Babypips runs a tight ship, and doesn’t tolerate trolls, advertisers, or scammers. Those reprobates can be found disrupting and polluting less “regulated” sites. (Can you believe that I’m speaking highly of regulation?)

You have a point. I wish there was a better way to review things on the net in general, to avoid fake reviews, like linking reviews to Facebook/Twitter/Amazon to increase the chances the reviews are real people and not shills. I saw reviews of brokers on other sites and realized they might all be nonsense.

@Clint

Size matters is some things, but not necessarily in a broker’s country of domicile. An honest broker, operating with the highest ethical standards in a tiny country like Dominica, where forex brokers are not regulated, is a safer place for your money than with a wheeler-dealer in a big headquarters building in Manhattan.

I actually visited Dominica and got a little bit of a feel for the people. But it sounds like TW’s presence might just be a corporate registration and mail drop (that unfortunately seems to comes up on google as being shared with scams.) I was also disappointed it doesn’t seem to show up on Google Maps. It is nice a mini-celebrity (Wayne McDonell) and regular youtuber who won some award is on board, but if TW tanks, I don’t see what’s stopping him from shrugging and saying he wasn’t involved in operating the company (his role looks like “Chief Market Strategist”.)

I agree that I’d rather find some trustworthy people than some supposedly “well-regulated” operation in NYC that is rotting from the inside out with high-risk crackheads and various shenanigans. I just don’t put it past people in any part of the world to be up to shenanigans, or be high risk/incompetent.

@Clint

There is a seething undercurrent of contempt for the Ruling Class in the U.S., and it runs wider and deeper than the Ruling Class can even imagine. That contempt explains the Donald Trump phenomenon. The Ruling Class keeps asking, 'How can dumb American voters support an obnoxious bully like Donald Trump? And the answer is, ‘He’s our obnoxious bully — and he’s going to dismantle your dictatorial Ruling Class.’

Even when this is explained to the Ruling Class, they can’t comprehend it. The next 9 or 10 months are going to be very unruly in this country.

Thanks for the welcome!

I have been in the camp that thinks Trump is a clown and the right is just as hopeless as the left when it comes to falling for a cult of personality for someone who should be unfit to be leader of the free world, but I am slowly seeing the Trump appeal. He has seemed unpalatable as a politician, but more and more I’m seeing the opportunity he represents to upset the probably greater unpalatable status quo with the ruling class and politically correct groupthink in general, not to mention the professional agitators who seem to unfortunately be effective tools of nefarious actors. It definitely will be an interesting election year!

(Not that Canada matters, but our new drama teacher turned Prime Minister thinks deficits are “investing” in the economy and traipsed in and opened the all the spigots to the max for no apparent reason, and we elected a government to our main oil province that generally hates oil and is run by the kind of people who want to ban cars.)

My very early review of Trader’s Way so far:

I don’t think I’m worth listening too – I’m a newbie, trading forex only since January. But I decided to go ahead with a Trader’s Way account this morning and can report a few things. I was surprised how fast the personal and credit card verification was (within a couple hours from when I submitted info at 5am -0600, and basically instantaneous for CC) and funding the account with a small amount (also virtually instant.) If people I know see gold making big, predictable moves, I plan to sell them on this opportunity: “within a couple of hours you can be trading gold at small spreads and big leverage!”

Hopefully this broker turns out well for all of us who are using it. Timely withdrawals of large amounts (including large amounts from large gains) seems to be a good test. If I get a lot of funds I may try another one as well just to not have all my eggs in one basket. It is nice that other brokers are on here making an effort to engage the community.

I don’t care about spreads or commissions – they are already way lower than what I was used to trying to trade gold stocks and instruments on the stock market, but I notice Trader’s Way (cTrader) seems to have a consistenly lower spread on gold – I saw it go down to 8.0 cents, and the lowest I saw my FxPro (also cTrader) go down to was 14.0 cents. (I have them running side by side.) Silver spread seems higher this morning though: staying at 8.0 vs 2.4 most of the time (but percentage-wise, the silver spreads are so bad on silver on both brokers that you might as well just trade gold most of the time anyway.) Commission is also 30 per mil vs 45 for FxPro, and swaps are lower by an order of magnitude but I’m not sure I know how to read that. Ping seems about the same: 40/75ms for both, both reporting NewYork-2 as the server.

One thing that I am not used to is minimum purchase is 10oz, up from 1oz for FxPro, which may limit me from learning & making tiny training-wheel/moneyball trades. I believe I tried for 1:1000 leverage but only got 1:100 – not sure why, but I see that’s the max for gold/silver trading so maybe that’s what I want anyway. It’s plenty for me right now. I don’t have any stock indices in TW’s cTrader – I am going to miss that, mainly for having the charts all in one application but also for the rare times I wanted to trade them.

I’m considering signing up for bitcoin for the first time to avoid fees and limits with this broker. That seems like a plus to me to have this option. (Of course then there’s the hassle of finding a good bitcoin broker, and their fees.)

[Clint]

[B]I propose to remove two brokers from Group 1 of our List:[/B]

• [B]Forex-Metal[/B] (Panama)

I have attempted, off and on, over many months to contact Forex-Metal regarding their withdrawal issues, and (more recently) the shut-down of their toll-free U.S. telephone line. I have never received a reply to any of my inquiries.

We have carried a WARNING regarding Forex-Metal in our List for a long time. I have been unable to find any information indicating that the issues mentioned in that WARNING have been resolved, or even addressed.

Personally, I have no confidence in this broker, and would not consider doing business with them.

I’m not aware of any participants on this thread who trade with Forex-Metal — but, I could certainly be wrong about that. If any of you trade with this broker, please tell us your first-hand experience with them.

If anyone has information, comments, or opinions regarding my proposal to remove Forex-Metal from our List, please join this conversation.

I will wait a week (until Thursday, March 31) for comments from the community. If there is no support for keeping Forex-Metal on our List, I will remove them on that date.

• [B]SmartTradeFX[/B] (St. Vincent and the Grenadines)

As in the case of Forex-Metal, we have carried a WARNING regarding the financial situation at SmartTradeFX for some time. And this issue remains unresolved. In fact, SmartTradeFX has not replied to my email requests for information.

This broker has moved around the world over the past few years, most recently from Canada to SVG. In the course of moving around, they have switched from accepting U.S. clients, to not accepting U.S. clients, to once again accepting U.S. clients. Here is a post from June 2012, during one of the times that SmartTradeFX was dumping U.S. clients — SEE HERE.

Once again, there seems to be a problem with U.S. clients attempting to open new accounts with this broker. My attempt to do that failed a couple of days ago. It’s ironic that now, apparently, U.S. clients cannot open accounts with SmartTradeFX, but “clients” in North Korea can. “United States” does not appear in the SmartTradeFX drop-down menu, but North Korea does. I was going to send them an application showing my country of residence as North Korea, but I reconsidered and didn’t send it.

I have no confidence in this broker, and suggest that we remove them from our List.

As in the case of Forex-Metal, I will wait a week for comments from the community. If there is no support for keeping SmartTradeFX on our List, I will remove them on March 31.

---

Like you, I hate to see the List shrink. But sometimes, I think, we need to do a little house-cleaning.

Please weigh in with your comments.

.

[Tallinex]

In the province of Alberta and maybe some other provinces (I think BC is bad too), unless you have income of $200,000 and financial assets of $1 mil or net worth of $5mil, you cannot trade Forex at all with local brokers. Thanks, nanny state.

Fear not!.. Tallinex only need you to have $100 in your pocket

We’ll be happy to welcome you to St Vincent “…land of the (Forex) free, and the home of the brave (trader)”

[Shatners_Last_Stand]

[B]
• [B]SmartTradeFX[/B] (St. Vincent and the Grenadines)

As in the case of Forex-Metal, I will wait a week for comments from the community…

.

Hello Clint,
I highly recommend deleting SmartTradeFX from the list. I had opened an account with them shortly after discovering this forum back in 2012. No problems until last year when I noticed my funds had been mysteriously deleted from my MT4 account. Of course, I inquired about this. That’s when I got the sob story about SNB related losses and how the company was trying to avoid bankruptcy.

Well, 9 months later my account value is still zero (though the website still allows me to log into my account in the back office). What I find most annoying is that there has never been any notice about this on their website. Have they really been accepting new unsuspecting clients all this time? Sounds a bit fraudulent to me.

Anyway, US resident or not, I recommend avoiding this broker. Assuming they are still even in business, they absolutely cannot be trusted.

Shatner

[Clint]

I highly recommend deleting SmartTradeFX from the list.

Shatner, my friend, where have you been hiding? — It’s good to hear from you!

Thanks for your input on this broker.

.

[HyperScalper]

Here’s some more Bid/Ask spread data for Tradersway.com and FinProTrading.com
MT4 ECN Live accounts. While pricing is by no means the only criterion for brokers,
it can be important for scalping or short term strategies.

timestamp is GMT/UTC and I’ll just pull the sample at 08:00 GMT when the
London Session opens. The last data column is supposed to be the
average number of milliseconds between ticks, and does not show
the maximum incoming “burst” data rate.

These are MetaTrader 4 incoming tick streams, as measured through an
NJ4X.com BulkTickListener across the 28 Currency Pairs listed.

Tradersway.com MT4 ECN

timestamp,2016-03-22 08:00:07,1458633607770, symbol min|avg|max|ratemsecs spread pips
AUDCAD,1.3,1.7,2.2,1170.0
AUDCHF,2.1,3.1,5.6,1233.3
AUDJPY,1.2,1.7,2.3,1120.0
AUDNZD,2.2,2.8,4.1,1230.0
AUDUSD,0.5,0.7,1.0,1476.7
CADCHF,1.4,2.5,4.5,1253.3
CADJPY,1.0,2.0,3.2,1150.0
CHFJPY,1.2,3.0,7.8,1123.3
EURAUD,1.7,2.7,5.3,1110.0
EURCAD,1.5,3.7,6.6,1113.3
EURCHF,0.7,2.5,5.2,1370.0
EURGBP,0.7,1.2,2.2,1173.3
EURJPY,1.0,1.5,2.5,1070.0
EURNZD,2.3,4.0,8.5,1080.0
EURUSD,0.2,0.6,1.3,1230.0
GBPAUD,2.0,3.1,4.9,1100.0
GBPCAD,2.8,4.9,6.4,1090.0
GBPCHF,2.0,4.5,11.1,1093.3
GBPJPY,1.0,1.9,2.7,1073.3
GBPNZD,5.7,6.6,8.5,1113.3
GBPUSD,0.5,1.0,1.4,1283.3
NZDCAD,3.2,4.2,6.9,1213.3
NZDCHF,3.0,3.4,4.7,1276.7
NZDJPY,2.0,2.6,3.6,1133.3
NZDUSD,0.9,1.2,1.6,1393.3
USDCAD,0.8,1.1,1.6,1250.0
USDCHF,0.6,1.1,2.0,1593.3
USDJPY,0.3,0.6,0.9,1206.7

FinProTrading.com MT4 ECN
(NOTE: their tradable EURUSD is designated as “EURUSD_”, oddly enough…)

timestamp,2016-03-23 08:00:30,1458720030602, symbol min|avg|max|ratemsecs spread pips
AUDCAD,0.5,1.3,2.1,1800.0
AUDJPY,0.4,1.1,1.5,1430.0
AUDUSD,0.3,0.7,0.9,1430.0
CADCHF,1.1,1.7,2.1,1913.3
CADJPY,0.9,1.4,1.8,2000.0
CHFJPY,0.7,1.7,2.2,2023.3
EURAUD,0.5,1.7,2.2,1490.0
EURCAD,0.7,1.2,2.2,1543.3
EURCHF,0.7,1.1,1.2,1846.7
EURGBP,0.3,0.7,0.9,1720.0
EURJPY,0.1,0.6,1.1,1290.0
EURNZD,2.2,3.5,4.2,1980.0
EURUSD,0.2,0.3,0.5,2070.0
GBPAUD,1.2,3.0,3.7,1500.0
GBPCAD,1.2,2.5,3.0,1986.7
GBPCHF,1.7,2.5,3.0,2103.3
GBPJPY,0.7,1.6,2.0,1680.0
GBPNZD,2.3,3.9,4.5,2130.0
GBPUSD,0.4,1.1,1.5,2130.0
NZDCAD,0.7,1.3,1.9,2183.3
NZDCHF,0.5,1.4,1.9,2466.7
NZDJPY,0.9,1.5,2.0,2033.3
NZDUSD,0.5,0.9,1.1,1823.3
USDCAD,0.2,0.8,1.1,1613.3
USDCHF,0.4,1.0,1.5,2116.7
USDJPY,0.1,0.4,0.5,2000.0

Here are links to some more extensive data in these files, where
the timestamps are GMT/UTC and 08:00 should be the
London Session open time since they are not yet on BST…

http://xscalp.com/data/bidaskspreads_tradersway.log
http://xscalp.com/data/bidaskspreads_finprotrading.log

Both of these offshore U.S. friendly brokerages offer some of the best retail pricing
around, I think you’d agree.

hyperscalper

[jikkie]

@HyperScalper

Here’s some more Bid/Ask spread data for Tradersway.com and FinProTrading.com
MT4 ECN Live accounts. While pricing is by no means the only criterion for brokers,
it can be important for scalping or short term strategies.

timestamp is GMT/UTC and I’ll just pull the sample at 08:00 GMT when the
London Session opens. The last data column is supposed to be the
average number of milliseconds between ticks, and does not show
the maximum incoming “burst” data rate.

These are MetaTrader 4 incoming tick streams, as measured through an
NJ4X.com BulkTickListener across the 28 Currency Pairs listed.

Both of these offshore U.S. friendly brokerages offer some of the best retail pricing
around, I think you’d agree.

hyperscalper

I have my live account at TradersWay and am generally very happy with them. However, their spreads at rollover are appalling, tho Joe Carney did warn me, and it’s not much of a problem to avoid opening or closing trades at that time. But today, which is a holiday in many countries and volumes are therefore low, the spread on gbpaud is awful, variable of course, but has been consistently bad for at least 5 hours now. As I write this, it is 14.4. I don’t believe they use fewer liquidity providers than the average ECN broker, so I really do not understand the justification for it.