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brownsfan019
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Posts posted by brownsfan019
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I read on ET that you were a stockbroker once upon a time, but now trade futures full-time instead. What impact do you think this legislation will have on your bottom line?Too early to say macd. Should this get through then it will be time to examine business structure and tax implications.
On the surface a 5% increase in futures taxation isn't the end of the world and that's my primary focus.
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U.S. To Hit Traders, Money Managers With A Tax Shot To The Gut
It's a good news, bad news situation. A financial-transaction tax isn't part of the new Senate and House bills for financial reform, but a carried interest repeal is on the table again.
The American Jobs and Closing Tax Loopholes Act of 2010 proposes repealing carried interest tax breaks and closing the self-employment tax loophole for S-corporations, alongside other changes of less importance to traders. This is a new version of the bill passed by the House in December, and is now up for a vote in both the House and Senate. Passage is expected after a fight.
What do these changes mean?
Currently, investment managers in hedge funds using profit allocation, otherwise known as “carried interest,” instead of an incentive fee to enjoy lower 60/40 tax rates on futures, and lower long-term capital gains tax rates on securities.
If the repeal passes, carried interest income will be re-characterized as ordinary income. Carried interest is different from an incentive fee. The former is considered investment unearned income and the latter is classified as earned income subject to the self-employment tax, currently at 12.4 percent on the Social Security base amount ($106,800) and 2.9 percent unlimited thereafter. The unlimited Medicare portion is a great concern of managers with large carried interest income. The new health reform law will raise that Medicare tax to 3.8 percent starting in 2013.
Previous versions of this tax change called for classifying 100 percent of carried interest as ordinary income, but this rendition calls for a 75-percent re-characterization; the remaining 25 percent would retain the underlying income tax treatment for short- or long-term capital gains, 60/40 futures or interest income. If this 25 percent "break" survives, it will still make sense to keep carried interest structured into hedge fund vehicles.
Also, unlike previous versions, this bill offers a phase-in period of two years. In 2011 and 2012, half of the carried interest would be taxed at the ordinary income rate, with the remaining 50 percent eligible for capital gains treatment. Finally, in 2013 and thereafter, the 75/25 breakdown would kick in.
Tax increases all around
This tax increase for investment managers is even more painful when factoring in other scheduled tax increases. All income tax rates are scheduled to rise in 2011 when the Bush Administration tax cuts expire. Congress and the President want to extend those tax cuts for the middle class only, which excludes the upper income making more than $250,000 per year (filing jointly). The long-term capital gains rate is scheduled to rise from 15 to 20 percent and the ordinary rate shoots up to 39.6 percent from 35 percent. Other significant increases on the horizon: the blended 60/40 futures tax rate (from 23 to 28 percent) and the qualifying dividends tax rate (from 15 to 39.6 percent).
An unfair repeal
I think this repeal is a mistake and unfair. Managers risk their time, effort, reputation, brand and sweat equity in their funds, which I believe is tantamount to money. All of this risk capital should be considered capital gains. Funds also pay investment managers management fees, which are reported as earned ordinary income. The carried interest portion is managers’ pro-rata share of return on risk capital, putting them in the same boat as their investors. Proponents of this tax are using convenient (and faulty) logic as a means to their end: to raise taxes where the money is — in hedge funds and on Wall Street.
Is there a workaround?
The only legal way an investment manager can avoid the carried interest re-characterization is to personally invest his own money in his hedge fund. The bill contains “abuse provisions” to protect the Treasury from inappropriate behavior, and specifically says loans can’t be used to make cash investments. The new health care tax law beefed up tax avoidance scheme rules that make this type of behavior very dangerous for a taxpayer.
Closing the S-Corp loophole
In the past, investment managers for funds and managed accounts have reduced the self-employment tax on advisory fee income with an S-corp tax vehicle. The IRS knows S-Corporations are used in this manner and it insists on reasonable compensation to the owner/manager to pay some self-employment or payroll taxes. Guidelines suggest 30 percent is “reasonable,” which means the owner saves the self-employment tax on the remaining 70 percent of fee income.
Before you get too excited at the prospect of using an S-corp to reduce SE tax on the repeal of carried interest, here’s the bad news. The new bill has proposed to close the S-Corp self-employment tax loophole for S-corps "principally based on the reputation and skill of three or fewer individuals," according to the language of the bill. It appears Congress wants to close the self-employment tax loophole for smaller companies, one-person professionals who use the S-corp to avoid payroll. Many small investment managers have less than three people, and even some of the larger investment managers' reputations are based on a few key managers. Larger S-corps appear to be safe. Investment managers affected by this change may as well remain in an LLC structure filing partnership tax returns, which is usually preferred by their attorneys for governance reasons.
Better than a Financial Transaction Tax
These tax changes will collectively raise the income tax bills of profitable investment managers. It’s unfortunate, but better than a nasty, industry-killing financial-transaction tax. A FTT is the worst-case scenario for traders, so its absence from this legislation is something to be thankful for. But I don't trust governments in today's "meltdown" environment.
On the bright side, these financial regulations and tax changes should bring more market volatility, so hopefully traders can make back some of the extra costs in trading. The glass is half full, right?
Robert A. Green is a CPA and founder and CEO of Green & Company Inc. (GreenTraderTax.com and GreenTraderFunds.com), a publishing company, and Green & Company CPAs, LLC, a virtual tax and accounting firm catering to traders and investment management businesses.
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I looked at this forum because I was interested in the question of whether Candlesticks work.What I have concluded from the (much appreciated) discussion so far is that candlesticks by themselves are not of value, but they may be "in context". I take this to mean, in combination with other facts. I'd be interested in this being quantified. For example, "a doji in a short term downtrend and long term uptrend will result in a reversal x% of the time, but if both trends are in the same direction, it will result in a continuation y% of the time." (Of course, this statement needs quantification as well- including a definition of trends and time periods). But I'm just giving it as an example of a possible context.
This is the direction in which I personally would like the discussion to proceed. Guruji, how will you be proceeding? (I'm also interested in what your study of the doji following 5 down days showed, although I expect this event is so rare that it is not tradeable)
Sounds good WS - let us know what you find out from your analysis.
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Pat loves to provide after-the-fact charts on trending moves.
Since this was an obvious trade for you Pat and to show doubters out there, you should include your blotter as well showing actual executions and how you profited from this in real-time for once.
Otherwise, just another trending move that as the above poster said you don't need any fancy indicators to catch a trending move. A simple EMA will do the trick.
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How about just using a trailing stop? If it is set just outside normal noise levels then it should be able to ride a trend. For instance on the "other forum" a guy called Jacko uses a 50 pip stop on EUR and let's the trailing stop take him out of the trade. I guess that is one option that could be looked into and tested.Does anyone else want to share their exit strategies?
Trailers work great in a swift trend - otherwise, you can get ticked out like crazy.
The simplest approach is a fixed target. One way to do this is to view your risk and say your profit should be some multiple of that to justify the trade - If risking 10, should go for 15 or more.
There's no right or wrong answer and nothing will be perfect. Exits are my biggest mental crutch b/c hindsight trading is so easy.
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I just told someone in an email that exits are the worst - you will always be wrong - either out too soon or out too late in hindsight.
As soon as you accept that you will never got out at the high or low of a move, then it gets a little easier mentally.
IMO exits are the hardest mental aspect of this business b/c you constantly see what if's that revolve around more $ in your account.
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You should really do a search for him over at ET.
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Thanks Brown. I should be going live in a few days and I'll post if anyone is interested.Please let us know b/c I think most use the DOM.
Not sure you do this or not - but I would have a DOM up just in case you need it.
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Hello,Does anyone trade from the charts in OEC. If so, have you experienced any problems? Things seems to work pretty smoothly in the demo.
Thanks in advance...
I have heard good things about trading from the chart. I personally could never get into it, so I rely on the DOM.
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How much time would one need to get himself 'fit' to trade mini futures?There's no way to possibly give you a reply that would accurately provide you an answer.
Some 'get it' after a few months/years and some never get it. Some treat it like a hobby and others treat it like a business. Some are here purely to gamble and others are here to take calculated risks...
There are so many variables that your learning curve could literally start at a couple months to never. Most probably end up somewhere in the middle that actually make it and the rest eventually die out.
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What? A coherent thought would be great. Thanks.
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I had a very busy weekend but got in about 1 hour of play on this thing and wow - it's very fun! What I like the best so far is that you don't have a rigid 1-2-3 process of completing the stages as you do in most games. You can wander off, go kill some wild animals, help some strangers that are getting robbed, etc. and then head back to the mission at hand.
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I think a lot of new traders immediately jump to the S&P emini since it's the most popular by volume. Personally though I have found it more difficult to trade as a result of all this volume, and competition from very large players for fills at price levels. If I was recommending futures for a beginner I'd start with the Dow e-Mini which will move fairly lock step with the S&P, $5 per point, and a little easier to execute on your limit orders, or the Nasdaq e-Mini $20 per point. Just my
I agree 100%. New traders seem gravitated towards a contract based on volume and volume alone; however, they fail to realize they are also jumping straight into the deepest of all deep ends. There is a reason the ES has so much volume - b/c the biggest and brightest are there and ready to feast on you. In this arena, your competition not only includes other human traders but you are up against the fastest bots with the biggest pocket books.
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I would also take Oil but if I can get picky, I want Oil in the exact same current volatility we are in currently (and forever).
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As Kiwi said, everything is in context. To simply tell the program to find a shape may or may not work but I would venture a guess that the user will be disappointed.
Trading in it's simplest form is buying support and selling resistance, however you define support and resistance. Once you define your s/r then see how doji's or whatever formation you want looks at your s/r levels.
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May be a slight detour but.....I'd be interested in other peoples thoughts on this idea - which BrownsFan kind of eludes to. Time bars/candles patterns will often use the close as part of that pattern. It is certainly an important element in candle shape. A close on a intraday bar is pretty much random in my opinion. Therefore, patterns relying on a close (like candles) are doomed I tell you. Dooooomed. They may have more meaning on a daily bar because this price represents the price people are happy to hold overnight at, have their positions settled against etc. But in an intraday it isnt significant at all - which is why Browns correctly (IMO) states shape hunting is a fools errand.
Intraday trading is a unique animal of it's own and I do not believe that candlestick patterns as the only trading mechanism to be of any use. I agree that the close on intraday bars is not of much use.
I think I know what you're saying, and I agree to an extent. But to add to what Brownsfan said, it's not really find a shape - even on daily data. In reality, the more you watch charts and candles, bars, etc, you really just get a feel for price movement. Therefore, the doji or single bar is meaningless in and of itself (and like you said, closes seem to be random), but understanding how price reacts around certain levels is very beneficial to some.A better idea, might be to look at what happens around the dojis a program finds. Are there certain patterns, not just technical. Is there increased buying/selling pressure in the tick, etc. There are many ways to analyze a market, some more data intensive than others, but none of it is really wrong or right.
Well said! A doji by itself, even on daily or longer timeframe charts if looked at in a vacuum simply symbolizes that on that day, neither bears or bulls won. It does not signify a reversal or continuation when looked at in a vacuum.
The OP is only looking at doji's for reversals but I would argue they can also be tremendous continuation signals as well...
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I am new to the world of candlesticks and recently started to read about them. I completed a back-test on Doji as a trend-reversal signal.And they are NOT impressive
I completed testing four candlesticks patterns and the results are summarized. In the past 15 years, the doji successfully reversed the price trend the following day in 52% of the opportunities. That, I believe is a good representation of the doji candlestick
So one day you hate doji's and the next you like them? Are you really doing any real work here or just trying to drive traffic to your blog?
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I've been following all the threads, started by UrmaBlume and i've developed trade intensity indicator. Personally i don't know is it 100% replica of original TI but it seems that UrmaBlume keeps this secret because he doesn't answered to any of my questions, just gave some hints. I like blowfish's idea and am sharing this idea. It would be interesting to hear UrmaBlume, but here is my opinion:velocity of trade = price/time. Trade intensity = velocity of trade/time. Really my indicator measures with a 1/1000 sec precise how fast timestamps are moving and is it buying/selling tick. You could often observe, that commercial volume entered at specific levels ( pivots, trendline break and so on ), where all the retail traders are ripped. I observing this abnormal volume comparing this to the normal volume at this moment of the day and am calculating the total volume which have occured at these spikes. The total volume at the spike = acuumulated/distributed commercial volume. It seems that it works in some way for me, doesn't so good as for UrmaBlume but good enough too. Red spikes - buying volume, blues spikes - selling. Today accumulation have taken the place in three steps ( screenshots ). Just calculate volume on these spikes and you'll get commercial LONG volume. Would be interesting to see pictures from Urma.
Interesting screenshots boomerangas. Are you able/willing to share the code you use to construct these?
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I would also recommend Open ECry as a broker to consider. You can download a demo and test it out for yourself but it's been a very reliable and steady platform for me.
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So far the reviews on this are amazing. Looks intense.
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My biggest concern when traveling while trading is a reliable internet connection. Without that, I won't bother opening the software up to begin with.
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What about OEC during last week's crash? Did it hold well?My charts were perfect.
The data has been very reliable in recent memory (knock on wood).
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I've said it many times before - playing find a shape is a waste of time and energy.
Do candlesticks all by themselves work? Probably not.
Do candlesticks work in conjunction with other forms of analysis? Sure do.
So give up playing find a shape and start to learn how to read a chart and then candlesticks can become a friendly addition.
Also, you should note that candlesticks become less reliable the lower the timeframe. When Steve Nison was not a referral whore and actually writing meaningful work, those charts were daily or LONGER. In other words, you will need a lot more than a random doji to signal a reversal point.
Good luck, it's not quite as simple as finding shapes.
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A broken record man...What is the obsession with real time calls? We never have any issues with that. We're all in the room trading and talking about why we took a trade or what we're looking for in another.Before your rant, did you happen to see what Steven, the new TL admin posted... NOT ME.
I think it's like anything, we always need some "power users" to be involved to make it interesting -- more than likely people come and go without saying anything or contributing. So the Chat likely counts on a few key players to do a lot of the commentary/discussion and that starts to bring people out and involved. Maybe someone can have the idea to hold a chat on a specific topic, market, real-time calls, etc... and we can have some posts on here promoting it to generate some interest and participation.Not my idea this time, but nice try.
Suggestion was simple - if TL admin wants to bring his chatroom up from the dead and he would like to see real-time calls being made, then why not start that up himself?
See the idea/correlation?
Nice to see that you are overly concerned with my posts though.
Open E-Cry
in Brokers and Data Feeds
Posted
Not sure those can be removed. I don't use the Quote Window much at all, so not sure.