So far the following places seem to fit… Malta, Monaco, Singapore. Any others?
Currently in London - would taking advantage of the non-domiciled tax rate be my best bet here?
Also, I am planning to be a full time fx day trader. Are any of you out there full time traders (as in that is how you put food on the table)? What is the minimum sized trading account that you feel is necessary to go full time and support yourself, but maintain sensible risk management?
Assuming that you know how to trade forex, and you have a proven track-record of consistent profitability, in order to calculate the advisability of ditching your day-job, and making the leap to full-time trading, you need to accurately estimate two parameters:
(1) what percentage of your trading account balance can you consistently earn in profit, per month, each month, month after month — based on a maximum trading risk of 2%?
(2) realistically, how much money must your trading account throw off each month, to support your lifestyle?
The degree to which you accurately determine those two things will determine your chance of long-term success as a self-supporting, full-time forex trader. You must be brutally honest with yourself about these two parameters. If you lie to yourself, or fool yourself, or just plain calculate wrong, you might end up evicted, or hungry, or taking a job as a waiter in Malta, or Singapore, or wherever.
Let’s say that you are a consistently profitable trader who can grow your account by X% per month, while consistently limiting your risk on every trade. Let’s use 2% risk per trade as a prudent maximum — unless you have a compelling reason to use a higher percentage. And let’s say that you have determined that Y-dollars per month will cover your monthly living expenses (including quarterly or annual expenses, and some provision for contingencies).
I suggest [2 * Y] / X as the account size you need to start with.
Let’s put some numbers on this. Suppose that you can consistently grow your account by 5% per month, factoring in all your gains and all your losses over the long-term. And suppose that you can realistically live in Malta, or wherever, on $1,000 per month.
You need: [2 * Y] / X = [2 * 1,000] / 0.05 = $40,000 to start.
Initially, with that starting balance, you will earn $2,000 per month in your trading account. You will withdraw $1,000 to support yourself. You will allow $1,000 to remain in your account to build your trading capital. As your account grows, your monthly net profit (5% of your account balance) will grow, as well. This should keep you ahead of inflation, give you an added cushion against unforeseen expenses, and help you withstand market upheavals.
If the required starting balance that you calculate is larger than you can manage, you might be tempted to reduce (or eliminate altogether) the monthly addition to equity (the $1,000 of profit that you do not withdraw for living expenses). That would be a bad — possibly fatal — mistake, in my opinion.
And, I’ll repeat myself here: be honest with yourself about the amount you can consistently earn each month (as a percentage of your account balance), and about the amount you require in order to support yourself.
I think Turkey doesn’t have any regulation so far that taxes any internet based income. I haven’t been there since 2010, things might have change, but you might wanna look at it. Also the living isn’t that expensive there.
About the investment. Well it depends on how much you think you can make? - For example, how many pips can you make within a month? - Or how much of a percentage can you return within a month?
To both questions:
Ex. 1200 pips/ month.
Initial Deposit: $10 000
If you trade with mini lots, that would bring you $1200/month. Or 12% which is great considering.
Say you can return 10%, than investing $50 000 can bring you a nice income of $5 000.
Above all, moving into another place has it’s own ceremonies. To forget to count the house rent, bills and food. + New Language, New Culture that you’re gonna have to live with with!
So it sounds like an account size of $50k+ could be appropriate to go full time with. With that size of account, would it be appropriate to go beyond retail forex brokers? Would it be possible? From what I’m reading, the closer to the interbank market you can get, the better…
On the countries question; No I haven’t considered Turkey. Thanks, I’ll look into it now.
Of course Jake. The bigger the account the more close you get to the core which translates to tighter spreads, faster executions and higher reliability. I heard Dukascopy is good. As far as I know they are a bank up until the end of 2012. I don’t know whether they’ll comply to the new CFTC rules but their transparency reviews are high. You might also wanna check Deutche Bank.
Also, don’t forget to check the southern European Countries like: Croatia, Serbia, Albania, Monte Negro, Macedonia, Kosovo and Bulgaria. The living is cheap there, you can get a decent rent for 300 Euros per month. As far as regulations, I don’t have a clue. Also the reliability is pretty low there with the exception to Croatia.
Well, if you are ok with living in the middle east then you should check Dubai and Bahrain. I live in Bahrain, 0% tax rate , good internet and reasonably safe as long as you are not protesting against the regime. I guess Dubai is more safe but much more expensive.
I work in commercial real estate and lived in a ton of different places. Here are a few remarks of places people mentioned:
Bahamas: I had a great year there, but omfg was I happy to leave in the end. Yes, you don’t pay taxes, but make up for it by paying high rents and a ton for food. Keep in mind, everything’s imported. And yes, the beaches are awesome, there’s a few nice bars, the people are friendly…but it’s an ISLAND. After half a year you don’t want to see those places anymore
Dubai (and Abu Dhabi): I spent 2 out of 4 weeks down there for over 2 years. Yes, it’s awesome in terms of taxes, and going clubbing is cool too…especially the beach parties. Having said that, if you’re like me, you start getting pissed off at some restrictions. For example, I couldn’t play online poker, or watch porn. You can use a proxy server, but you’d still break the law. So either you live with those restrictions, or you break the law and risk getting jailed in a hot prison. Also, it’s a 2 class society and they treat people from Bangladesh or India like crap.
Personally, I’m gonna stay away from small islands from now on…it just gets boring too quickly.
If I were you, I’d check out Asia (Thailand, Singapore, etc) and certain Latin American countries like Panama or Cuba.
Thanks Salmeen10, I had never considered Bahrain, will look into it!
Radeh, that is some very welcome insight! As I mentioned in an earlier post, I visited the Bahamas briefly to get an idea of what it might be like to live there. The aspects that I was not 100% on are the aspects you have just confirmed for me.
I hadn’t considered Cuba - kind of thought it was still some kind of communist dictatorship. Will look into it further now. I had already been considering Panama however! Have you had any experience with Panama that you could share?
Singapore is very much on my list… I suppose it is just that I left Australia hoping to see the other side of the world (currently living in London). That said there is so much that is attractive about Singapore.
It seems that trading the NY/London overlap wouldn’t be ideal in Singapore (finishes at midnight) and Panama (begins at 7am). Workable in both cases, just not ideal.
Have been looking into Andorra, between France and Spain. Low (no?) tax, very safe, day trading time zone, 100Mbit internet as standard!.. big tick for my primary concerns. Although it comes across as quite a tiny place. Only 84,000 population for the entire country. Also, there’s no airport! Still, sounds like a beautiful place to live. Anyone have experience with Andorra?
I keep thinking of getting a massive Range Rover, and a massive touring caravan to go with it, and go touring for a couple of years, and go wherever you can get a fast enough mobile signal to trade, trade, tour, holiday, rinse and repeat!
Regarding Bahamas, that’s right. It’s an island. However. the US is not that far away. With a lot of money made by trading you can easily shuttle between your home and FL. Then frankly, how often do you travel around if you work at home? The typical route around my home is to the stores and back. I do travel for a few months per year, but then I go by plane anyways. Biggest obstacle I see are the hurricanes.
Years ago I also thought about Panama and did a little research. Unfortunately, Panama is a little like an island, because out of the big cities you might run into problems from, say, not so nice strangers. Same in some other countries. Plus flight tickets might be more expensive.
Middle east is a no no for me, as I do not like too strange regulations. Somebody above wrote already about it. Plus it’s simply not my lifestyle how they live there.
I guess there is no perfect place, so it’s all about what suits best for an individual trader. To me Bahamas is the best option actually. They also speak and write english. A big plus! I speak already two languages and don’t have much time to learn a third one.
Sure, it’s not the cheapest place to live. But if you seek for a tax haven, it’s not because you have no money, right? I can only eat so much food every day, so I assume the savings from zero tax outweight the higher food prices with ease.
If you’re single, and hooking up with a girl on a somewhat small island: DO NOT MESS IT UP!! Because if you do, you can’t evade her, and word gets around quickly
i must say, tho, mr jake william, that it seems to me that you are perhaps putting the cart in front of the horse…
it seems to me that you are focusing on the business/accounting issues of this business of trading prior to your actually having a rock solid trading system in place. and just a heads up, yes, i have read your posts and i know that you cant tell the difference between up and down in this business. i do not intend to be rude, i intend to be blunt and direct.
just a hint for you, sir, you will not lullaby the forex into giving you pips, but plz feel free to try, if you wish.
btw, if you take the time to really look at their website, you might notice that the law firm of lennox paton is nothing short of a world class law firm… may i suggest that you not approach them until your game is tight… they will smell thru your nonsense before you can blink twice… and i do not expect that you are gonna go their route on a trailer park budget… take a moment to look at their people, their people are top notch pros… you are not gonna get some kind of cheap cookie cutter offshore corporation/mailbox/bank account nonsense out of them… every last one of their people are tops in their areas of expertise…
personally, i hope that they are painfully expensive.
i expect that mr paton is going to be dizzy when he sees my work and i will expect nothing less from him and his company.
True that. Beside of the excellent calculation from Clint I would not start thinking about living out of my trading/investment career below a solid amount of say 100k of [B]cash[/B] plus expat expenses. Plus on top of that a solid trading system. Expat expenses will probably as high as 20k for itself, because you need to pay a lot for fees and traveling etc. I am an expat already as I live in two continents and if I calculate what I had in fees and container shippings, it’s definitely not a bargain.
So, letz shrink wrap that to a 150k of [B]cash[/B] you need to have a free back for a couple of years to start. Plus as I said a reliable trading system.
bbytrader, I doubt you even have a cart, let alone a horse. I mean, if your plan is to talk your success into existence, you are off to a flying start.
