Thursday, April 16, 2009

Taxing? - IFCN WK 71 -Thu - Equity: $2,870.23

Yesterday was "Tax Day" for the USA. It was the last day to file our taxes for 2008. And for those who have to pay, the deadline for paying.

Not my favorite day, as I always end up paying in since I'm self-employed. Fortunately, there are a few benefits from being a trader in the USA, tax-wise. Thanks to Ronald Reagan, our taxes are a bit lower when obtaining profits from trading forex and futures than stocks. And we can write off applicable expenses in the course of our occupation.

Another good reason to focus on forex and futures.

Last week there was an anonymous comment (I usually don't answer anonymous posts -- it could have been an oversight on the part of the poster) but the question was appropriate for the season.

It was as follows:

How do you account for the impact of TAXES on your lovely equity curve? Seems that would put a serious dent in the CAGR plans in fact...?

My reply, in case you didn't read it:

Very good question---

Everyone has a different tax situation. If this trading account was the only income you had, very likely you would not have any taxes to pay. Standard deductions would have you paying very little or nothing.

Some of you trading forex are in other countries with varying tax situations - some taxed, others with no tax whatsoever.

In the USA, some trade forex from a Roth IRA, where there are no taxes to pay from the gains.

I've already paid taxes on the Challenge account's increase last year. I will probably continue paying the taxes from profits from my other trading operations until the equity gets over $50K.

I have a pretty good idea (based on my plans for increasing the account) that a majority of the profits will come near the end of the "challenge" and most of the taxable gains will be paid from the completed total.


We have some decent trades this week.

The Usd/Jpy from last week has turned decidedly profitable. The Gbp/Usd was profitable out of the gate and has turned into a trend week.

The Usd/Chf short was good earlier, now backing up a little, with lackluster results so far in the Eur/Usd.

The short Gbp/Jpy trade from last week got stopped out when the long FSP trade from this week triggered, with less than half of it's original risk of 526 pips.

And silver (XAG) picked up a little. I'll be happier when it stays above $14. Then a bigger move should be on it's way.

All in all, a decent week. The trades follow:

FirstStrikePlus positions from last week:
*usd/jpy: Short @ 99.51, stop 101.12. Currently profitable.
*gbp/jpy: Short @ 146.66, stopped at 149.15 for 249 pip loss (less than ½ of original risk)

This week's executed FirstStrikePlus trades:
  • eur/usd: Long @ 1.3314, stop 1.3123.
  • gbp/jpy: Long @ 149.15, stopped at 146.83 for 232 pip loss.
  • gbp/usd: Long @ 1.4783, stop 1.4632.
  • usd/chf: Short @ 1.1454, stop 1.1601.
FirstStrikePlus trades will be exited on Mondays at 00:00 CST if profitable. (First-Profitable-Open Exit)
Trading account equity: $ 2,136.23
Silver position equity: $ 744.00
(Current XAG price: $12.81 – 400 unit position average: $10.95)
TOTAL Equity: $ 2,870.23

Have a good morning.

Joel Rensink

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