Now the trick is deciding which open trade pairs to close and take losses on before the end of the year. Attached is the end of my history for 2017. I have some tough choices. While I am showing $76,669.99 in profits for the year thus far, I do not want to pay tax on those profits. This year I can’t carry over any losses from previous years because I showed good profit last year as well.
Ok, take a look at the attached. They are my open trades ATM. If you think it looks terribly ugly – you are right! But don’t forget, “NO PAIN NO GAIN.” I am down 360k in my open trades right now. Please remember that I have jacked my account a large amount since getting into this racket a few years ago.
The reason I am posting this is to get some feedback from some smart people out there… I want to drop over 70k in trades, maybe more so that my account starts to balance and so that I do not pay any tax on my profits for 2017. I may in fact take a considerable loss so that next year, or the year after, I will have a nice carry-over affect and have some tax-free earnings.
This account is in USD and I live in Canada. An added bonus for sure… I am looking for feedback. Should I simply close my 3 ugly EUR/JPY trades? That would chop about -75k off of my account. I am expecting the EUR to eventually rise on the JPY. Eventually…
I have only a handful of days to decide and execute. Your advice? Questions???
Yes you do seem to have hedged yourself into something of a corner with that Euroyen don’t you ?
It’s the first time I have noticed your thread and it’s not the way I have traded as yet. However it does seem a little silly to sit on 360k in losses, some of which can never recover completely (like that euroyen ? ) and pay taxes on drawings.
You seem to be completely neutral on that pair, but in loss on both sides and the 6 bets are just cancelling each other down in loss.
No advice at this moment, but those 6 pairs fighting against each other do seem a little wasteful if you need losses for tax purposes.
I’m going to take a look at the rest of your thread now and perhaps I’ll come back with some feelings in a few days.
I have to make some tough decisions prior to closing on Dec. 31. This is paramount if I choose to avoid paying tax on profits for 2017. ATM I am leaning on closing those 3 nasty EUR/YEN trades. It was never my intention to do the contradictory trades that cancel one another. In the short term they can be a useful tool. In the long term there is little or no benefit to them.
I look forward to hearing from you. PM me if you would prefer.
So you’ve made 76k profit this year and in 2013 you were saying your compounded loss was 100k - so 4x 76 = 304 k and 360 - 100 = 260 compounded loss over 4 years.
Seemingly in actual fact, you are barely breaking even - Hell man - you shouldn’t be paying tax at all !
Your system seems to rely on a Range trading strategy - and I can appreciate that to some extent and what you say about things returning to the norm eventually - does bear water over a long period - and on the longer charts Forex is a set of instruments where that is almost self fulfilling - but it can take a long while and you do need to have the correctt “Norm” in mind.
Over the years you’ve obviously caught a lot of “Bottoms and tops” which would make some of our trend following brethren jealous !
However that is not being helpful. Look at all those yen positive bets - almost all your big losers are yen positive ! - You need to rebalance your portfolio imo to be more representative and more unrelated. and sometimes you need to be prepared to accept that you’re just wrong ! Look at all those “swap fees” and then at the taxes you’ve paid on “Winnings”, which were in fact not “Wwinnings” at all !. Whether to take the bulk of your losses now, or just enough to wipe out your tax liability - I don’t know. That depends on your view of the future of the movements and future tax legislation
All I can suggest is that you get out the monthly charts for the losers and see where the balance was before the 2008 debacle, some of the pairs seem to be retracing towards those levels.That should give you a real balance of probabilities for a shortish term return to profitability. Then I’d cut what you need to and use the margin released to trade your portfolio positive and wipe out your tax problem at the same time. Bear in mind that while it is not good to take a loss, it does have the positive of releasing margin for better trades.
Hope that helps to clarify things in your own mind a little.
Had I stuck to my original plan and not gone too heavy and then had to keep closing and opening trades, I’d have been a millionaire long ago. It is the psychological issue that makes forex tricky and there is always so much fluctuation!
I have managed to get my forex account balance well above USD914k. Having said that, I currently have open trades that total -360k. That still leaves me with about 554k in equity. How much and for how long have I invested into this account? That would probably be a reasonable question. I am around the break even point if I were to close all of my open trades as soon as the market next opens. Not very good after 7 years… But I am still confident that the JPY will shoot up, even if only short term, as a result of some global event. When that happens I will capitalize on it. In the interim, I continue to jack my balance somewhat aggressively. My margin level is over 2000% so I am in a safe place. I will ride the wave and when my open trades get to a point of near equality, I will be in great shape.
As far as taxes go, all I have to do is dump 76k and I won’t pay any. If I choose to dump more, I can carry that over and use it to my benefit in the future. The tax issue is complicated… How the government sees it is different from how the forex trader does. It is easy to show a profit but really be in debt! I learned a lot over the past 7 years that will be invaluable moving forward. If the USD/JPY drops 1000 pips or more, I will be in amazing shape. If it goes the other way, I will still be able to withstand most of the damage and ride the slide back down…
One more thing… In the months when I am much more engaged in trading, I have been very successful. For example, I have lost my f/t job twice in 2017. Both times after that, while unemployed, I spent considerably more time trading forex. Over 2 separate spans of time totaling about 22 weeks, I jacked my account balance by over 50k. I am convinced that when I have the time and I am willing to take smaller profits (and smaller losses when needed), I can be successful. When I have been successful, I generally leverage either 1.0 or 2.0 on trades and am not afraid to take all of my profits when the opportunity arises. I often will open 3-6 1.0 or 2.0 trades on the same pair and take profits of $300-$600. This can add up nicely over time. If I choose to wait for greater profits, even once a specific trade candle has calmed down and there has been little movement for some time, almost every time, that profit will disappear and retract to where it was previously. It often even becomes a loss. So, depending on a host of variables, it is usually best to take your profits when you are presented with them.
I’m not that positive on the yen. In fact, I think that in the long run, the yen will lose considerable value as the Japanese economy will be stagnant for years. I have made a lot of trades both long and short with the yen. I believe that there will be some major world event that will jack up the value of the yen, even if only briefly. I have much more leverage right now on trades with the USD/CAD long. I also have a much smaller amount of EUR/JPY long. So, a bit of contradictory trading but I am confident that it’ll all work out. I think that the USD will rise well above the CAD at some point in the not-too-distant future and that should be a big boost for my portfolio as I am very heavy on USD/CAD long at the moment. I have day-traded / hour-traded that pair quite a bit over the past few years.
I have traded the yen a lot over the years because I became very familiar with it having lived in Japan and being on top of the news etc.
