Daytrading Expat?

[Light]

Deleted

[thighlander]

that is kind of thin....would be a good hobby in Thailand with low cost of living, but a 20% return which the pros will not do this year, will get you 6000. True day trading is kind of like FX traders...few make real money, but active stock traders might occasionally buy and sell the same stock several times in a week, but never take huge positions and sell rapidly. most of the online workers can get something going to pay bills, but then have visa problems. I don't because I am 50 in Thailand, but I have to keep about 30k use tied up in a tha ibank at less than 2%.

BTW, there are a number of people selling courses on how to make big money daytrading..like a lot of their crap; there is more money selling how to, than actually doing it.

[Contrarian Expatriate]

I cannot emphasize enough for folks how truly difficult day trading is to do successfully. According to Anton Kreil, the foremost authority on training successful day traders, about 90% of traders LOSE money.

Technically, I am a swing trader or a momentum trader which are sub-categories of day trading. While I am lucky enough to not be in that losing category, I would characterize my income from day trading as very modest.

I can count on my hands the time I bought and sold a stock or ETF in the same day. However, I do review the markets and my portfolio each day to see if I can buy something on the cheap or realize a profit on the something that I have held for a bit.

I tend to only trade monthly-paying dividend ETFs so if I have to hold it for some months while it recovers, at least I am getting paid a handsome dividend each of those months.

I have about 20 ETFs that I monitor daily, but I do consider compelling bargains from outside that subset on occasion.

Finally, I only trade with about 20% of my portfolio, most of which is in a Roth IRA and a traditional IRA. That way, I do not pay taxes on my gains and dividends until I cash out at age 59.5.

My advice to people is take the Anton Kreil course, then dabble in day trading for a year with just a small account so you get the feel of how stocks react, recover, languish and overall behave. After a year or so, increase your bets.

The most difficult thing to master about day-trading is managing your losses. Losses are a part of the game so if you can keep them small, you have a good chance at being a net winner.

Finally, the markets are overdue for a bear market. I have no idea how day trading conditions will be when that happens because fluctuations will be downward for a protracted period of time and you want to aim to NEVER lose money because of the way math works.

If I have a $100 stock that goes down 50%, I must then realize a future gain of 100% just to break even. Let that sink in.....

[CannedHam]

I tend to only trade monthly-paying dividend ETFs so if I have to hold it for some months while it recovers, at least I am getting paid a handsome dividend each of those months.

You do realize that dividends come off the share price, right? It's not a free lunch. And you get taxed on those dividends - hence why so many corporations have increase buybacks (vs dividends) in recent years.

[Contrarian Expatriate]

You do realize that dividends come off the share price, right? It's not a free lunch.

Not really as that is correct only in theory, but in practice is largely quite not the case. The reason being is that the share price drop on the ex-dividend date has a complex interplay with normal, day to day market movements. That being the case, if I buy an ETF a week or more prior to the ex--dividend date, that built in drop is not enough to cause me a capital loss if I sell it to lock in the dividend. Also, the drop in price is usually before trading time so on many occasions, the ETF is back up in price before the trading day ends.

In the worst case scenario where a price drops long term, I would just hold the ETF until the collected dividends are more than the capital loss would be which is an overall net gain.

Therefore dividends are indeed the freest lunch in investing.

And you get taxed on those dividends....

Not if you hold them in a Roth IRA. Moreover, if you have a traditional IRA you accumulate all those dividends tax free until you cash out of the IRA at age 59.5.

In the case of a normal brokerage account, you do get taxed but so long as you hold the ETF for a 60 day period, they are considered "qualified dividends" which are taxed at the much lower capital gains rate instead of the normal income tax rate.

But I've never understood the logic of those who refrain from profiting for fear of being taxed. If you are being taxed, it is because you have profited. Having a huge tax bill means that you had even larger gains in the tax year. Should I not have rental property because I'll get taxed? Should I not have a high salary because I'll get taxed? Should I not realize capital gains because I'll get taxed? Paying taxes - where I am legally obligated to - is a sign of having made money. Don't want to pay heavy taxes? Easy, simply don't make huge money.

[CannedHam]

You do realize that dividends come off the share price, right? It's not a free lunch.

...

But I've never understood the logic of those who refrain from profiting for fear of being taxed. If you are being taxed, it is because you have profited. Having a huge tax bill means that you had even larger gains in the tax year. Should I not have rental property because I'll get taxed? Should I not have a high salary because I'll get taxed? Should I not realize capital gains because I'll get taxed? Paying taxes - where I am legally obligated to - is a sign of having made money. Don't want to pay heavy taxes? Easy, simply don't make huge money.

I agree 100%. I belong to a bunch of investing forums and the amount of planning around taxes is insane. It's like most people don't realize you only pay taxes if you make a capital gain or receive a dividend. And taxes on investments are usually far lower than those income taxes.

Have you ever compared your performance to say, if you have put all your money in an SP500 index fund and just held onto it?

[Neo]

You do realize that dividends come off the share price, right? It's not a free lunch.

...

But I've never understood the logic of those who refrain from profiting for fear of being taxed. If you are being taxed, it is because you have profited. Having a huge tax bill means that you had even larger gains in the tax year. Should I not have rental property because I'll get taxed? Should I not have a high salary because I'll get taxed? Should I not realize capital gains because I'll get taxed? Paying taxes - where I am legally obligated to - is a sign of having made money. Don't want to pay heavy taxes? Easy, simply don't make huge money.

I agree 100%. I belong to a bunch of investing forums and the amount of planning around taxes is insane. It's like most people don't realize you only pay taxes if you make a capital gain or receive a dividend. And taxes on investments are usually far lower than those income taxes.

Have you ever compared your performance to say, if you have put all your money in an SP500 index fund and just held onto it?

It might be to our benefit if you could list those forums.

[CannedHam]

You do realize that dividends come off the share price, right? It's not a free lunch.

...

But I've never understood the logic of those who refrain from profiting for fear of being taxed. If you are being taxed, it is because you have profited. Having a huge tax bill means that you had even larger gains in the tax year. Should I not have rental property because I'll get taxed? Should I not have a high salary because I'll get taxed? Should I not realize capital gains because I'll get taxed? Paying taxes - where I am legally obligated to - is a sign of having made money. Don't want to pay heavy taxes? Easy, simply don't make huge money.

I agree 100%. I belong to a bunch of investing forums and the amount of planning around taxes is insane. It's like most people don't realize you only pay taxes if you make a capital gain or receive a dividend. And taxes on investments are usually far lower than those income taxes.

Have you ever compared your performance to say, if you have put all your money in an SP500 index fund and just held onto it?

It might be to our benefit if you could list those forums.

bogleheads, morningstar forums, early-retirement.org, and a few subreddits (investing, personalfinance, financialindependence, leanfire)

[Neo]

You do realize that dividends come off the share price, right? It's not a free lunch.

...

But I've never understood the logic of those who refrain from profiting for fear of being taxed. If you are being taxed, it is because you have profited. Having a huge tax bill means that you had even larger gains in the tax year. Should I not have rental property because I'll get taxed? Should I not have a high salary because I'll get taxed? Should I not realize capital gains because I'll get taxed? Paying taxes - where I am legally obligated to - is a sign of having made money. Don't want to pay heavy taxes? Easy, simply don't make huge money.

I agree 100%. I belong to a bunch of investing forums and the amount of planning around taxes is insane. It's like most people don't realize you only pay taxes if you make a capital gain or receive a dividend. And taxes on investments are usually far lower than those income taxes.

Have you ever compared your performance to say, if you have put all your money in an SP500 index fund and just held onto it?

It might be to our benefit if you could list those forums.

bogleheads, morningstar forums, early-retirement.org, and a few subreddits (investing, personalfinance, financialindependence, leanfire)

Good. Thanks.

[Light]

Deleted

[Contrarian Expatriate]

Not if you hold them in a Roth IRA. Moreover, if you have a traditional IRA you accumulate all those dividends tax free until you cash out of the IRA at age 59.5.

In the case of a normal brokerage account, you do get taxed but so long as you hold the ETF for a 60 day period, they are considered "qualified dividends" which are taxed at the much lower capital gains rate instead of the normal income tax rate.

But I've never understood the logic of those who refrain from profiting for fear of being taxed. If you are being taxed, it is because you have profited. Having a huge tax bill means that you had even larger gains in the tax year. Should I not have rental property because I'll get taxed? Should I not have a high salary because I'll get taxed? Should I not realize capital gains because I'll get taxed? Paying taxes - where I am legally obligated to - is a sign of having made money. Don't want to pay heavy taxes? Easy, simply don't make huge money.

I have a question about taxes. Let's say I move abroad and I only have income from dividends, capital gains, and other forms of unearned income potentially like royalties and advertising revenue. Do I need to pay the USA taxes on my "Unearned Income" or is there an equivalent Exemption for Unearned Income?

I had the same question several years ago. My tax accountant informed me that the federal tax exemption only applies to EARNED income. Passive income is considered UNEARNED by the IRS so it is indeed taxable unfortunately.

To be sure, your tax preparer should be more aware of the ins and outs of this exemption. Advertising revenue might be considered earned income, but I cannot be sure.

Another tax concern is to ensure you have legal residence (domicile) in a state that does not tax you while you are out of state. That is one reason I am domiciled in Florida, but several others like Florida are out there.

[Contrarian Expatriate]

Have you ever compared your performance to say, if you have put all your money in an SP500 index fund and just held onto it?

In retrospect, I could have made far more money with the buy and hold strategy with an S&P 500 fund the last 10 years. However, I consider the stock market to be grossly overvalued and long overdue for a bear market crash, therefore my exposure to it has remained relatively small the past several years.

When it goes down about 30% from it current point, and it will, at that point I will being getting back into the market very slowly and incrementally.

I do consider the US stock market to be unduly risky. However, the marketing and hype tend to make people blind to that risk. In this age of crypto-currencies, crowdfunding investments, and rising interest rates, the stock market will be a blood in the water opportunity when it is all said and done.

Of those who have make 50, 60, and 70% over the last few years, most will lose heavily when the market drops. Also, those investors have not made anything until they have actually sold their positions to lock them in. The vast majority never sell because of the "buy and hold myth" or they sell when they cannot bear to watch their nest eggs withering away. Many economists and financial gurus believe that those who employ the buy and hold strategy will not live to see their holdings recover after the deep crash that is expected.

At present, rental property, private equity, or crowdfunding platforms like Fundrise are 100 times smarter for small investors due to the overdue stock market crash. When interest rates go higher, more people will be renting properties thus enriching those getting into position now.

[Light]

Another tax concern is to ensure you have legal residence (domicile) in a state that does not tax you while you are out of state. That is one reason I am domiciled in Florida, but several others like Florida are out there.

I would like to become domiciled in a state with no income or sales tax before I leave America but the process takes too long. One year and proof of residency. I have no idea how I can prove residency if I have no intention of buying or renting property in that state because I would be moving abroad. If I do not maintain any connection to any state, let my drivers license expire, and remove my voter registration would that mean that I have terminated my domicile to all 50 States so if I ever returned to America I would be considered a Resident of no US State?

[Contrarian Expatriate]

Another tax concern is to ensure you have legal residence (domicile) in a state that does not tax you while you are out of state. That is one reason I am domiciled in Florida, but several others like Florida are out there.

I would like to become domiciled in a state with no income or sales tax before I leave America but the process takes too long. One year and proof of residency. I have no idea how I can prove residency if I have no intention of buying or renting property in that state because I would be moving abroad. If I do not maintain any connection to any state, let my drivers license expire, and remove my voter registration would that mean that I have terminated my domicile to all 50 States so if I ever returned to America I would be considered a Resident of no US State?

All you need to do is do what most expats do which is have your mail collection service be your legal address. So long as your tax address is that one, your driver's licence (you should maintain one), and your voter registration all go to that new address, you would beat the challenge of your former state trying to come after you for taxes.

I have a mailbox service that I renew each year in Florida.

Finally, the only Americans who have no domicile are the ones who have never lived in the US. If you lived in the US, your last domicile is your domicile unless you actively change it.

[OutWest]

Have you ever compared your performance to say, if you have put all your money in an SP500 index fund and just held onto it?

In retrospect, I could have made far more money with the buy and hold strategy with an S&P 500 fund the last 10 years. However, I consider the stock market to be grossly overvalued and long overdue for a bear market crash, therefore my exposure to it has remained relatively small the past several years.

When it goes down about 30% from it current point, and it will, at that point I will being getting back into the market very slowly and incrementally.

I do consider the US stock market to be unduly risky. However, the marketing and hype tend to make people blind to that risk. In this age of crypto-currencies, crowdfunding investments, and rising interest rates, the stock market will be a blood in the water opportunity when it is all said and done.

Of those who have make 50, 60, and 70% over the last few years, most will lose heavily when the market drops. Also, those investors have not made anything until they have actually sold their positions to lock them in. The vast majority never sell because of the "buy and hold myth" or they sell when they cannot bear to watch their nest eggs withering away. Many economists and financial gurus believe that those who employ the buy and hold strategy will not live to see their holdings recover after the deep crash that is expected.

At present, rental property, private equity, or crowdfunding platforms like Fundrise are 100 times smarter for small investors due to the overdue stock market crash. When interest rates go higher, more people will be renting properties thus enriching those getting into position now.

I figure you are a sitting duck if you are in the markets now. Good quality but modest rental housing with low or no debt, some good farmland and build a gold stash if you do not have one...