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Jul 10 2021 01:04pm
Quote (HeadConcert_com @ 10 Jul 2021 11:25)
You can do unlimited cash trades regardless of how much you have, that rule is only for borrowing or margins. If you're going to live off PDT though you'll want more than $25k to use anyway though.



Right but I’m pretty sure if your on cash account and use all you BP for a trade or 2 you have to wait 2-3 days for that cash to settle to use for trading again. Few years back I remember trying to trade around it managing BP so I never ran out of settled cash. But yes if you can manage it correctly you can do unlimited trades like you’re saying unless I’m mistaken :)
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Jul 10 2021 05:27pm
Quote (RatM @ Jul 10 2021 12:04pm)
Right but I’m pretty sure if your on cash account and use all you BP for a trade or 2 you have to wait 2-3 days for that cash to settle to use for trading again. Few years back I remember trying to trade around it managing BP so I never ran out of settled cash. But yes if you can manage it correctly you can do unlimited trades like you’re saying unless I’m mistaken :)


It depends how fast they clear it, otherwise you'll make some good-will (I think it's called) errors from time to time.

My broker usually only takes a couple hours.

EDIT: and it's only on the same stocks

This post was edited by HeadConcert_com on Jul 10 2021 05:28pm
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Jul 11 2021 11:38pm
Quote (HeadConcert_com @ Jul 11 2021 01:27am)
It depends how fast they clear it, otherwise you'll make some good-will (I think it's called) errors from time to time.

My broker usually only takes a couple hours.

EDIT: and it's only on the same stocks



Nice story
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Jul 12 2021 08:09am
There's other major consequences that didn't even get touched here. If you're short term investing in Canada in a registered or unregistered account you may be deemed a day trader. This is not a good thing. If CRA deems you a day trader the full gain is considered taxable income at your effective tax rate. If you were not deemed a day trader only 50% of the gain is considered a taxable capital gain and taxed at your effective tax rate. So even if you are averaging a higher return over long term investing, its very likely the tax burden is going to chop that return down to or below what you would have made if you were long term investing.

Any type of high frequency trading in Canada is not advisable unless its your job or you have accepted that you could or will be taxed as if it was your job even though its not resulting in you loosing the tax advantage of capital gains tax and if you try it in you're registered accounts there's significantly more penalties.


Based on my limited Reddit experience, I am assuming the IRS does not care or have similar rules?

This post was edited by SBD on Jul 12 2021 08:10am
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Jul 12 2021 08:40am
Quote (SBD @ Jul 12 2021 09:09am)
There's other major consequences that didn't even get touched here. If you're short term investing in Canada in a registered or unregistered account you may be deemed a day trader. This is not a good thing. If CRA deems you a day trader the full gain is considered taxable income at your effective tax rate. If you were not deemed a day trader only 50% of the gain is considered a taxable capital gain and taxed at your effective tax rate. So even if you are averaging a higher return over long term investing, its very likely the tax burden is going to chop that return down to or below what you would have made if you were long term investing.

Any type of high frequency trading in Canada is not advisable unless its your job or you have accepted that you could or will be taxed as if it was your job even though its not resulting in you loosing the tax advantage of capital gains tax and if you try it in you're registered accounts there's significantly more penalties.


Based on my limited Reddit experience, I am assuming the IRS does not care or have similar rules?


Pretty much the same however it’s mostly just based on how long you hold the position. You can be day trading and holding longterm shares in your same portfolio and the positions that were opened and closed within a year lose the capital gains advantage
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Jul 12 2021 09:20am
Quote (Bazi @ Jul 12 2021 08:40am)
Pretty much the same however it’s mostly just based on how long you hold the position. You can be day trading and holding long term shares in your same portfolio and the positions that were opened and closed within a year lose the capital gains advantage


Our rules are very vague and you have to rely on precedent sent in tax court at this point. They examine number of transactions per year, average holding durations, type of securities being held (speculative in nature won’t help you) and if it escalates to court or examination they will assess time spent trading. As you can see its quite open to interpretation.

The other rule that really hurts us is CRA trying to limit loss harvesting. You cant sell and re-buy the same security within a 30 day window. If you do the loss can't be used to offset income. Again, this is also open to interpretation. If I sell a S&P 500 index stock ETF at a loss and turn around and buy a US total market, is it buying a similar security. Up to the court, I'd try to argue it isn't but its not time I want to spend dealing with CRA so i still try to be careful.

This post was edited by SBD on Jul 12 2021 09:20am
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Jul 12 2021 01:29pm
Quote (SBD @ Jul 12 2021 10:20am)
Our rules are very vague and you have to rely on precedent sent in tax court at this point. They examine number of transactions per year, average holding durations, type of securities being held (speculative in nature won’t help you) and if it escalates to court or examination they will assess time spent trading. As you can see its quite open to interpretation.

The other rule that really hurts us is CRA trying to limit loss harvesting. You cant sell and re-buy the same security within a 30 day window. If you do the loss can't be used to offset income. Again, this is also open to interpretation. If I sell a S&P 500 index stock ETF at a loss and turn around and buy a US total market, is it buying a similar security. Up to the court, I'd try to argue it isn't but its not time I want to spend dealing with CRA so i still try to be careful.



And if you’re deemed a professional trader every position loses capital tax advantage regardless of the length you’re holding it for?

This post was edited by Bazi on Jul 12 2021 01:30pm
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Jul 12 2021 02:39pm
Yes, lets look at what other people are doing and be reactive to them instead of analysing audited financial statements. You my friend are a fucking genius
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Jul 12 2021 02:42pm
Quote (Bazi @ Jul 12 2021 01:29pm)
And if you’re deemed a professional trader every position loses capital tax advantage regardless of the length you’re holding it for?


From the ones I have seen, again no hard rules in place here an account might be deemed as a day trading account, but that does not mean your other accounts are in violation of the rules. I haven't seen them distinguish between trades in a single account, though. If a person files a Notice of Objection, I'd say they have a good shot at overruling if they can prove some transactions should not be treated as if they were done as part of day trading.
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Jul 13 2021 01:44am
wholesome topic
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