trading 'futures only' for living

[Francis]

Maxforce,are you sure about the act? really for waht i know that the money we earn from share or from "TOTO" is non taxable.  any one can check that out ?

[Maxforce]

*ahem* FYI I m an accountant. 

P/S: According to the Act, they can. Thats all I m saying. Whether enforcement is carried out or not, is a different matter.

[jamestmc]

it mean is a grey area until they find that this group of ppl can be a major contribution to the goverment and they will take action.

so cant be too high profile.

cheers

[smallcap]

Got meh??? when we strike the legal 4 ekor, the income-tax already included in the prize ma, how can LHDN chase back the tax?? But stock market i only know that we need to submit the stock dividend records to them.

[Maxforce]

Dividend different...
When u get dividend, oledi minus 28%.
But you may not be taxed at 28%.
So they ll give u back loh.

OK, like this... say you re a professional gambler.
As we know if you and I goto Genting and gamble.
Win oso no tax.
But if professional gambler, the Income Tax Act says - business income woh.
So must be taxed. Haha. But enforcement again, another story lah.

[jamestmc]

from maxforce statement, it sound like if you declare urself as a 'full time' or 'professional' which u dont have other jobs, then the income u get from future trading is subjected to tax.

so i guess as long as u doing other jobs and trade in future then u shall be able to run off

haha. the 4-digit num is tax free.

cheers

[Maxforce]

not necessarily. 

[Francis]

thanks for the info.

[smallcap]

Ok, when LHDN sent me the BE form next year, i will ask Maxforce to teach me how to claim back my 28% of dividend deduction. I oledi lost few hundreds bcos i dunno that actually can get back from LHDN   
Ops... next year suppose to submit online liao... no more form sending to us.

[Maxforce]

AIyoh, read the manual lah... there s this one thing call Section 110.

[smallcap]

Ohhh... Section 110, but u tell me now no use leh... usually the income-tax payer don't like to keep such info in mind until they've received the form 

[survivor]

All right guys,

Very brave of you I must say to make plans for making a living in the futures market which is probably slightly non-random.

I mean, what kind of capital engaged and what kind of return on the capital invested are you talking about ?

I have been thinking long these lines for quite some time and here are my 2 sen worth regarding the above:

1. Since it is a business, it is a not such a bad idea to look at the median returns of the busineses over the past. It seems to me that the median return is about 10% (nominal) for most large businesses in the past century in the developed world. But since this is a one man only business let us factor in 1.5 times to get a nominal return of 15% required.

2. Now for a living one must atleast duplicate the standard Malaysian middle level exective income. Let us assume it is 75 k per annum (its just a number) and one is not living in the poor house with that money nor is one livng in the lap of luxury.

3. Therefore the capital invested must = 75/0.15 = 500 k.

4. So... that's for starters assuming every thing is going to plan. So how to earn the 75 k from the market ? Are the players there complee idiots to hand it over on a platter? No. But that is a very different matter.

Any way ,o earn 75 k / annum, one must earn about 6 k in a month.

5. How to earn 6k ? By having a profit of 120 points in  a month. Lets us say that you trade 2 times a month and have an average profit of 10 points each. Thus the amount of contracts you must trade = 120/2/10 = 6 contracts each time.

6. So calculating the capital requirements in another way... how much capital you require to trade six contracts each time. Considering that you would not like to lose more than 1% of your capital in a trade and considering that you might lose upto 15 ppts on the average in a trade the capital requirement = 6x10 x 50/ 0.01 = 300 k

7. So both the figures ROI and the capital requirements are off by about 50%.

8. Crucial question - can you trade in this fashion. Let us assume you are a pro with 10 plus years experience etc in the markets and have devleoped the instinct for survival above all others...even so let us add a factor of safety of 50%.

9. Thus we are talking 300 x 1.5 = 450 k

10. And that just for trading....what about the house and the car and children adn the wife.... etc etc.

11. It seems to me that one must go Pro, considering the above yearly requirement of 75k only after his bank balance or the intended cash invested hits about 750 k !

12 Also, the trading horizon must be at least 10 to 20 years for things to average out.
     other wise one blow like 1987 october or 9/11 or worse will knock you out and that will be the end.

I wonder if I am right.

What do you think ?

[Maxforce]

Prudent thinking 
But the frequency of trades per month and the overly prudent per annum (Hence jacking up the capital commitment) may have been flawed.
If one has the abovementioned frequency of trades with the ROI which you ve mentioned, then the person CANNOT trade for a living.
It would be simply foolish to do so.

[oneman]

Income tax for share & future trading ?
Actually, income tax for trading is non-existent all over the world....
reason: 90% of all traders are losers..and transaction cost include the tax...the trading provide -side-income for all...not the only income...the only winners are GOVs..they are they 10% pop

[smallcap]

oneman, when comes to tax issue, gov won't talking like that to u la, they will only take any of the opportunities to "squeeze" money from our pockets, especially for those "non-earth" ppl  I'm from Mars, my father from Pluto