Question by daytraderbm: I’m about to start daytrading for a living – What do I need to do?
I’m about to start daytrading for a living. What all do I need to do? Do I need to get a business checking to keep things seperate from my regular checking account? What forms do I need to fill out for tax purposes? Do I need to send in money monthly or quarterly or just at tax time? Any help on this stuff would be greatly appreciated!
Best answer:
Answer by Bart M
You need to stop and consider how much you will likely lose. This is pure speculation and you will probably be hurt financially.
For example, will Citigroup go up or down on Monday? Why? What other stocks might follow C? Why or Why not?
Know better? Leave your own answer in the comments!
Stop and find a real job. When you day trade, you usually get very large losses and small gains. Please reconsider and invest in the long term, you will be much better off. I’m sure a lot of people can agree with that.
-EJP-
http://www.rmicsi.com
high risk of loss,
however, i’d go with GM or Ford
You’re most likley going to want to report “market to market”. There will be quarterly estimated taxes due. It’s not likely that you’ll need a “business checking account”…. but good record keeping is key.
The IRS Wash Sale Rule is an absolute nightmare for active traders!
You’ll want to go to a “traders expo”. The next one is in Las Vegas in November.
Trade with a broker that specializes in day & swing traders. ThinkorSwim, Tradestation, Interactive Brokers, Terranova Trading, MasterTrader etc. They’ll cater to your needs. (IB has poor customer service, poor platform & great rates). It’s sometimes wise to have two brokers.
Make sure your computer can handle at least 2 monitors. One monitor is almost imposible to day or swing trade with.
I assume you already averaging about 3% or more in returns a month (for the past 2-3 years). As you already know… money management, posistion sizing, stops etc., are more important to your success than picking the right equity.
Good luck & enjoy!
ya@ErieStockTrader.com
You should separate you personal accounts from your trading account. There’s no real need to have another bank account, just keep good records of income and expenses – a spread sheet can handle all your needs
Make sure you maintain good trade blotters, detailing all your purchases and sales. This will be helpful, not only for tracking trades but also can be used in the preparation of taxes.
Depending on the income you will be generating will be the criteria for filing an estimated tax return. If you can, find yourself a good honest accountant, there are many items you can deduct as a sole proprietor (insurance, rent, facilities expenses, subscriptions etc)
If you use a separate brokerage account, then all you income/expence can run through this account. The monthly statements will support your trade blotter and other income/expense items.
Don’t forget the four main areas that all investors/traders need
1- A written sound trading/investment plan with rules that will not only help you but more importantly protect you, mostly from yourself.
2 – Sufficient trading/investment capital. Use your own money, there’s no need to go into debt so that you trade/invest.
3 – A written money management program in place.
4 – A full and complete understanding of the rules & regulations of the industry.
Go for it, I wish you the best, just be disciplined and you’ll do fine.