Archive | November, 2010

Filing for Trader Tax Status

10 Nov

“In this world there is nothing that is certain except death and taxes” -Benjamin Franklin

Green Trader Tax

If you trade full time and even part-time you may be eligible for “trader tax status.” Trade tax status is especially important in you trade equities. The biggest advantage to claiming “trader tax status,” is the ability to elect Mark to Market accounting. MTM accounting allows the trader to treat capital gains and losses as ordinary gains and losses. Filing under “trader tax status” also allows the deducting of our trading business expenses on a Schedule C.

The Tax Guide for Traders

I highly recommend the book The Tax Guide for Traders by Robert Green for anyone who thinks their trading falls under “trader tax status” or who has been trading professionally for some time. Green is the expert when it comes to trader tax laws and there are many tax advantages to your past filings by electing “trading tax status” on this year’s return. Green’s website Green Trader Tax has a wealth of information as well.

"Fear the Boom"

8 Nov

Week 45 Analysis

7 Nov

A light week of news ahead relative to the monster truck rally of the fed last week. Ben Bernanke announced Wednesday that the US Central Bank it will buy $600 billion in long-term Treasuries over the next eight months.

What is Quantitative Easing?
Quantitative Easing or QE is a monetary policy implemented by the central bank to increase the money supply in the US Economy. In essence, the printing of money, except instead of printing pieces of paper with Lincoln, Washington, and Jackson’s faces on them, they are making it “electronically” so to speak, in the markets. The US Central Bank credits its own account with new money and then uses that money to buy assets, in this case long-term bonds. This leads to a weaker dollar, lower mortgage rates, higher inflation, and lower savings rates and potentially a bond bubble with the possibility of a massive recession.

As for new stock and option positions, go with what’s working. Now more than ever it is important to select those relatively strong and relatively weak stocks because in case of a correction (which is to some degree is highly likely beit large or small) the wheat will be separated from the chaff.

Market Internals are what we look to intraday to give us a guage of how the market is doing. Consider it like a heart monitor, measuring the markets pulse. See the video below for more.