Trading your account

[Animorph]

Interesting. Would love to hear why.

Insignificant? Maybe for highly liquid securities which may have a 1-2 cent spread. Irrelevant? Unless the spread is zero, I don't think so.

I have sold at the ask price and bought at the bid price plenty of times, when the prices have been stable enough to actually tell. A simple limit order at the appropriate price allows you to wait for buyers or sellers to come to you.

 

[youbet]

Since retiring in 2006, I've limited my trading activities to 5% of my FIRE portfolio. Based on a level of success I'm OK with, I increased this to 10% beginning in 2012, although I'm not at that level yet.

Nothing complicated and, in hindsight, nothing excessively risky. Buy low, sell high. Typical holding period is a few days to a few months averaging maybe 2 weeks. Some use of options, but not much. I've sold a few covered calls, but not recently.

Success seems to come in spurts. Patience is key. Right now I'm not holding anything. Prices are up and we travel quite a bit in the summer and I don't like to have anything going on that requires daily monitoring while we're on the road.

It's very entertaining and educational but not really a big money maker vs my biggest buy and hold holding, Vanguard TSM.

 

[Nords]

Welcome T bone. Would love to know how you decided on that name.

It's the avatar name under which Warren Buffett plays online bridge.

Or so he says. I've never actually checked to see whether it's a joke or a fact.

 

[Ed_The_Gypsy]

Bon chance, mon ami.

 

[utrecht]

I actively trade about 15% of my portfolio. Almost entirely with options but I do throw in the occasional stock day trade. I love it and I've been pretty successful but I have to say that right about now when I'm doing my taxes its a giant pain in the arse. I have an options trading blog if anyone is interested in checking it out. I think it's OK to post a link to it here?

OptionsMan5

 

[pfleming]

@utrecht your broker should give you the option to export to csv or excel. TDAmeritrade has the option to directly export the current year trades into HRB or Turbo Tax online. I'm thinking that most tax software going forward will have this option, especially since IRS regs are now requiring the broker to keep your basis information with each transaction (holdings from before the past couple of years aren't going to have the correct basis, but it should get there eventually)

 

[LOL!]

Options are funny. They are not reported on a 1099B -- at least they were not when I traded options.

 

[Gone4Good]

The bid-ask spread is not a cost of trading - it is what someone is willing to buy or sell the security for.

So you and one other counterparty trade a stock back and fourth all day long through a broker commission free. The broker, who did nothing other than execute your trades in a completely riskless fashion ends the day with a tidy little pile of money. Where did it come from?

 

[pfleming]

Options are funny. They are not reported on a 1099B -- at least they were not when I traded options.

I had to look back at some old statements (currently trade options in my IRA so no 1099-B) and I can confirm that at least in 2001 and 2002 I had to use my statements, not the 1099-B, for my options transaction. Hmmm. Just did it, never even thought about it.

 

[brewer12345]

So you and one other counterparty trade a stock back and fourth all day long through a broker commission free. The broker, who did nothing other than execute your trades in a completely riskless fashion ends the day with a tidy little pile of money. Where did it come from?

The money fairy.

 

[utrecht]

Option trades still aren't reported to the IRS. I believe they are going to start reporting next year. How they've gone this long without reporting is beyond me. I could just not report any options transactions and the IRS would never know.

My broker does have an option to export the transactions to a spreadsheet and even the correct tax forms, but that doesn't really help me. I need Turbo Tax to be able to import all of the transactions. Maybe it does work with Turbo Tax somehow but I cant seem to get it to work as of yet. I use both E-Trade and Optionshouse. I was able to get the Optionshouse software to print out a schedule D and a form 8949 but again, that doesnt help me if its not imported into TurboTax with the rest of my tax info.

Another thing I cant fathom is that up until this year and next year, the brokers have never reported cost basis on stock trades to the IRS. All the IRS knows is how much you sold a stock for. You could make up whatever you wanted for the cost basis. I wonder how much tax money that has cost the US in the past 50 years?

 

[pfleming]

I haven't had to think about this particular issue for myself since my assets are pretty much confined to my IRA. Does your tax software allow you to import your transactions in csv/text format? I know the pro software we use at the office will do so, but I haven't experimented with it much.

 

[utrecht]

I haven't had to think about this particular issue for myself since my assets are pretty much confined to my IRA. Does your tax software allow you to import your transactions in csv/text format? I know the pro software we use at the office will do so, but I haven't experimented with it much.

Not that I know of. It will allow me to access financial institution (or broker) and supposedly download the transactions automatically but it didn't work when I tried it. It said my username or password was wrong. I'll probably try harder next year to get it to work.

 

[farmerEd]

Turbotax definitely lets you import stock trades (at least from some brokers,like schwab and fidelity), even figures out all the gains and losses for you...I wouldn't still be day trading (in my after tax account), if I couldn't do this automatically...

Last time I got a 1099 on paper, it was about 3 inches thick...and I used to key it all by hand, but haven't had to do that in almost 10 years thanks to TT. Now I do my taxes every year in about 2 hours total.

 

[LOL!]

Not that I know of. It will allow me to access financial institution (or broker) and supposedly download the transactions automatically but it didn't work when I tried it. It said my username or password was wrong. I'll probably try harder next year to get it to work.

One must make sure they enter the proper rendition of their broker. For example, it ain't "Wells Fargo", it is "Wells Fargo Advisors" this year.

 

[tbone]

Thanks for all of the responses. Just to be clear about my style, by “trading” I don’t mean to imply that I am that frequent a trader. While sometimes I am in and out of a position within the same day, most of the time my holding period is days or even weeks. I usually don’t trade options and I will go long or short depending on the trade. I can also go long periods of time in cash if I don’t see opportunity in the companies I am targeting. My thought has been to conservatively (passively) invest about 50% of my portfolio and “actively” trade the other 50%. Based on a small fraction of the returns I have been able to generate historically in the actively traded account I should be able to meet my spending needs in retirement. That is the plan anyway. I will let you know when I pull the trigger.


MDJO – I chose the name because that was my nickname back in the day when I used to be more “beefy”

 

[check6]

While sometimes I am in and out of a position within the same day, most of the time my holding period is days or even weeks. I usually don’t trade options and I will go long or short depending on the trade. I can also go long periods of time in cash if I don’t see opportunity in the companies I am targeting. My thought has been to conservatively (passively) invest about 50% of my portfolio and “actively” trade the other 50%.

+1 Pretty much my "style" as well. I do tend towards stocks with a high beta.

 

[Nords]

... most of the time my holding period is days or even weeks.

Oh! Days or even weeks! Oh, well, then, that doesn't make you a trader at all. Nope. Not a bit.

 

[pfleming]

What? I'm sure that makes tbone a trader - not a day trader. Cause if tbone's not a trader, I'm not a trader and I thought I was