Jump to content



Photo

This Proposal Could End Active Trading


  • Please log in to reply
61 replies to this topic

#1 IndexTrader

IndexTrader

    Member

  • TT Patron+
  • 7,694 posts

Posted 14 January 2009 - 09:28 PM

Here's an article that was in the NY Times today. A 1/4% tranaction tax perhaps levied when you buy and when you sell. So if you bought and sold 1000 shares at 20, it would cost you $100, win or lose. This would also be levied on futures and options. As I see it, it would end active trading as this cost would become prohibitive. I would suggest that you speak against this, and resist it vigorously at every level, to include with your Congressmen and Senators. This could potentially become a popular idea amongst non-traders, and uninformed "economists".

http://www.nytimes.c...rbert.html?_r=2

IT

Edited by IndexTrader, 14 January 2009 - 09:30 PM.


#2 unosuke

unosuke

    Member

  • Traders-Talk User
  • 417 posts

Posted 14 January 2009 - 09:45 PM

From the article:
"The economist Dean Baker is a strong advocate of a financial transactions tax. This would impose a small fee ranging up to, say, 0.25 percent on the sale or transfer of stocks, bonds and other financial assets, including the seemingly endless variety of exotic financial instruments that have been in the news so much lately.

According to Mr. Baker, the co-director of the Center for Economic and Policy Research in Washington, the fees would raise a ton of money, perhaps $100 billion or more annually money that the government sorely needs."

Dean Baker does some of the finest economic work today, and I agree with him wholeheartedly that some kind of "Tobin tax" should be instituted - the sooner, the better.

A 0.25% tax on every transaction merely requires a profitable trader/speculator/gambler to earn more than 0.50% on a round trip buy-and-sell trade. And let's keep in mind that's exactly what we're all doing here - gambling.

I recall a study from several years ago that found a very small tax - like 0.01% - on all currency transactions worldwide would raise enough money to provide access to potable drinking water throughout the developing world. That's a very worthy goal for such a small tax on gambling.
Current Positions: Long EEV @ 40.29, Long DUG @ 24.66, Long DXD @ 59.62, Long SDS @ 72.70, Long TWM @ 61.84, Long QID @ 48.21, Long FXP @ 20.43, Long SSG @ 43.76, Short XOM @ 69.31, Short AAPL @ 117.52

#3 zoropb

zoropb

    Member

  • Traders-Talk User
  • 7,059 posts

Posted 14 January 2009 - 09:45 PM

Here's an article that was in the NY Times today. A 1/4% tranaction tax perhaps levied when you buy and when you sell. So if you bought and sold 1000 shares at 20, it would cost you $100, win or lose. This would also be levied on futures and options. As I see it, it would end active trading as this cost would become prohibitive. I would suggest that you speak against this, and resist it vigorously at every level, to include with your Congressmen and Senators. This could potentially become a popular idea amongst non-traders, and uninformed "economists".

http://www.nytimes.c...rbert.html?_r=2

IT



Well many of us will take our marbles and go play some where else. Why if you are from another country would you bother trading in the US or if you trade from offshore accounts would you consider the US with this silly tax as a trader. Not to mention the potential an even greater crash by so much money being pulled out.
At this time I would think they are likely not to touch this one. On the other hand they have made plenty of bone head moves already.

Z

Short to the gold buy trade: from 2900. Day total: 12/14   +26.75

Total +503.25

 

I run a traders Blog with high probability targeting on ES , closed to any new members.


#4 cgnx

cgnx

    Member

  • Traders-Talk User
  • 2,103 posts

Posted 14 January 2009 - 09:52 PM

Its a good move. Even if they take 25 cents a trade. It would add up to alot of money. No real skin off anybody. They would have to charge quite a bit per, to dissuade folks.
If it can be cornered, it will.

#5 U.F.O.

U.F.O.

    U.F.O.

  • TT Patron+
  • 5,605 posts

Posted 14 January 2009 - 09:57 PM

It wouldn't hurt swingtrading, it would kill daytrading. Scalpers would have to alter their trading style. U.F.O.
"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!"
~Benjamin Franklin~

#6 IndexTrader

IndexTrader

    Member

  • TT Patron+
  • 7,694 posts

Posted 14 January 2009 - 10:04 PM

From the article:
"The economist Dean Baker is a strong advocate of a financial transactions tax. This would impose a small fee ranging up to, say, 0.25 percent on the sale or transfer of stocks, bonds and other financial assets, including the seemingly endless variety of exotic financial instruments that have been in the news so much lately.

According to Mr. Baker, the co-director of the Center for Economic and Policy Research in Washington, the fees would raise a ton of money, perhaps $100 billion or more annually money that the government sorely needs."

Dean Baker does some of the finest economic work today, and I agree with him wholeheartedly that some kind of "Tobin tax" should be instituted - the sooner, the better.

A 0.25% tax on every transaction merely requires a profitable trader/speculator/gambler to earn more than 0.50% on a round trip buy-and-sell trade. And let's keep in mind that's exactly what we're all doing here - gambling.

I recall a study from several years ago that found a very small tax - like 0.01% - on all currency transactions worldwide would raise enough money to provide access to potable drinking water throughout the developing world. That's a very worthy goal for such a small tax on gambling.


Evidently you're not an active trader. A trader buying and selling 1000 shares at $40, could potentially pay $200 total in and out. And by the way, he doesn't have to be profitable. This tax is paid regardless of whether your trade is profitable or a loser. Now add that to your commissions.

This could easily stop traders from active trading, thus reducing liquidity in the markets. I don't call that "fine economic work".

Here's a link to some information from Green and Co., tax advisors:

http://www.greencomp...nblog011409.pdf

IT

#7 IndexTrader

IndexTrader

    Member

  • TT Patron+
  • 7,694 posts

Posted 14 January 2009 - 10:06 PM

Its a good move. Even if they take 25 cents a trade. It would add up to alot of money. No real skin off anybody. They would have to charge quite a bit per, to dissuade folks.


It's not 25 cents a trade. It's .25% per trade, possible levied on the buy and sell. That's $200 on the example I just gave.

IT

#8 zigzag

zigzag

    Member

  • Traders-Talk User
  • 1,116 posts

Posted 14 January 2009 - 10:07 PM

It would be no big deal to daytraders in this market. It would be brutal to daytraders in a non-volitile slow trending market. You will just have to know which market you're in.

Edited by zigzag, 14 January 2009 - 10:08 PM.


#9 maineman

maineman

    maineman

  • Traders-Talk User
  • 1,987 posts

Posted 14 January 2009 - 10:08 PM

I'm biased of course but it makes no sense to tax something where liquidity is being provided and folks are making a living. WHy not tax useless or harmful things like tobacco or junk food, for instance, which really don't add much to the common good. I have no idea how many active scalpers like me are out there. Would the institutions, like Morgan Stanley and others pay the same tax? It doesn't smell right to me. mm
He who laughs laughs laughs laughs.

My Blog -Maineman Market Advice

#10 atlasshrugged

atlasshrugged

    Member

  • TT Patron+
  • 4,409 posts

Posted 14 January 2009 - 10:08 PM

lets just hope that the investment banks have some sort of lobby left in em! they are all owned by the gov anyways...so it will end up in lower commissions thus hurting the gov