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Regarding minimum balance & taxes (Canadian / toronto trader) Ninjatrader
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Regarding minimum balance & taxes (Canadian / toronto trader) Ninjatrader

  #11 (permalink)
Market Wizard
Sarasota FL
 
Futures Experience: Intermediate
Platform: NinjaTrader, Sierra Chart
Favorite Futures: ES
 
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noobforlyfe View Post
Thank you Bob, for your unconditional help all throughout my few threads on this forum. I am a firm believer of the notion that you can make something out of nothing if determination, will and passion is there. I don't have the capacity as a student to put aside $25,000 that I can afford to lose (in my initial phase of trading live).

Indeed, it is not a game for people who are in tight positions, but I feel I can make this work once I figure out which piece goes where in the puzzle. I probably won't be able to be as successful as many of you guys, but hopefully in a year or 2 I can develop something that works for me.

Thanks once again for your support and letting me know about the harsh reality.

Best,

John

It's not that $25,000 is the "right" number, although $500 is definitely a wrong one. Somewhere in between () is the right number for you.

What that is will be up to you. Just be aware that being too close to the minimum means you can't handle any losses or make any mistakes.... And losses don't only come from mistakes. Everyone has the experience of doing everything right in a trade, but it goes south anyway. It's a matter of percentages, so you will need a cushion.

Good luck.

Bob.

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  #12 (permalink)
Elite Member
Calgary, Alberta
 
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bobwest View Post
It's not that $25,000 is the "right" number, although $500 is definitely a wrong one. Somewhere in between () is the right number for you.

What that is will be up to you. Just be aware that being too close to the minimum means you can't handle any losses or make any mistakes.... And losses don't only come from mistakes. Everyone has the experience of doing everything right in a trade, but it goes south anyway. It's a matter of percentages, so you will need a cushion.

Good luck.

Bob.

Bob is right on the money here.

@noobforlyfe - you stated that you are a firm believer you can make something out of nothing. Without meaning to sound harsh, when it comes to trading I think that is the tallest of orders. At the beginning we all have passion and determination but the markets have a tendency to erode that very quickly. It only takes a string of losses to realise that. And however you proceed, you won’t find any edge of difference that another trader hasn’t already tried.

That is why being funded adequately is so important. There are some who are adamant that when trading ES you need $50,000 of capital. Some say you can probably get away with $25,000.

Personally I like to have $10,000 per contract I trade and I like to keep a constant $50,000 balance. So when trading 5 contracts with a 3 point stop, my total risk per trade is 1.5% of that capital. So, including commissions I can be wrong approximately 64 times in a row. That is unlikely to happen because I know the mathematics of my trades and their probable outcomes, therefore my probability of ruin is low. However, I have had days (well documented on here) where nothing went right and I ended up drawing down into my initial trading capital by quite some margin. But - I could dust myself off, level out and fight another day because my capital cushioned that loss.

So if we dial this down to a smaller scale, trading a single contract in my opinion would require at least $10,000 in your account. I’ll even throw you a tighter stop at 2 points. Including commissions you could be wrong 95 times in a row.

That’s may sound like a lot of forgiveness, but you will be amazed how quickly you will burn through those losing trades. Plus, trading a single contract is inherently difficult because you have no ability to scale out of a position and immediately reduce risk. And loosely speaking IF your profit target is more or less be equal to your risk, you should be aiming to grab 2+ points per trade.

There is much, much more to all of this than I can possibly write here and I have just scratched the surface. My point though is that identifying the risk is much more important than profits. And with risk, undercapitalised accounts will ruin very quickly.

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- Trade what you see. Invest in what you believe -
--------------------------------------------------------

Last edited by JonnyBoy; July 12th, 2016 at 11:07 AM.
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  #13 (permalink)
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Toronto , Ontario, Canada
 
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JonnyBoy View Post
Bob is right on the money here.

@noobforlyfe - you stated that you are a firm believer you can make something out of nothing. Without meaning to sound harsh, when it comes to trading I think that is the tallest of orders. At the beginning we all have passion and determination but the markets have a tendency to erode that very quickly. It only takes a string of losses to realise that. And however you proceed, you wonít find any edge of difference that another trader hasnít already tried.

That is why being funded adequately is so important. There are some who are adamant that when trading ES you need $50,000 of capital. Some say you can probably get away with $25,000.

Personally I like to have $10,000 per contract I trade and I like to keep a constant $50,000 balance. So when trading 5 contracts with a 3 point stop, my total risk per trade is 1.5% of that capital. So, including commissions I can be wrong approximately 64 times in a row. That is unlikely to happen because I know the mathematics of my trades and their probable outcomes, therefore my probability of ruin is low. However, I have had days (well documented on here) where nothing went right and I ended up drawing down into my initial trading capital by quite some margin. But - I could dust myself off, level out and fight another day because my capital cushioned that loss.

So if we dial this down to a smaller scale, trading a single contract in my opinion would require at least $10,000 in your account. Iíll even throw you a tighter stop at 2 points. Including commissions you could be wrong 95 times in a row.

Thatís may sound like a lot of forgiveness, but you will be amazed how quickly you will burn through those losing trades. Plus, trading a single contract is inherently difficult because you have no ability to scale out of a position and immediately reduce risk. And loosely speaking IF your profit target is more or less be equal to your risk, you should be aiming to grab 2+ points per trade.

There is much, much more to all of this than I can possibly write here and I have just scratched the surface. My point though is that identifying the risk is much more important than profits. And with risk, undercapitalised accounts will ruin very quickly.

Hello,

Both of you are correct and I see your point of view and will definitely consider this when I even think about going live. Thank you for the "real" constructive feedback and please feel free to speak openly at any time. I know you guys have been through it all and your experience will definitely speak more volume than my words.

So thank you once again for honestly sharing your personal experience and thoughts. I truly do appreciate it. The positivity from the members of this forum is truly amazing.

Best,

John

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  #14 (permalink)
Elite Member
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noobforlyfe View Post
Hello,

Both of you are correct and I see your point of view and will definitely consider this when I even think about going live. Thank you for the "real" constructive feedback and please feel free to speak openly at any time. I know you guys have been through it all and your experience will definitely speak more volume than my words.

So thank you once again for honestly sharing your personal experience and thoughts. I truly do appreciate it. The positivity from the members of this forum is truly amazing.

Best,

John

And one other thing, trading in SIM is great to learn the trading platform or to test a system, but it cannot ever replicate the 'feel' of trading with real money.

I used to think SIM was a total and utter waste of time (and have made that clear on many posts), but I have softened my stance in recent years for a few reasons I won't go into here.

When you go live, you will truly understand what it is all about.

Use Futures.io as much as you can. You won't regret it. By using the search function you will be amazed what has already been discussed before.

--------------------------------------------------------
- Trade what you see. Invest in what you believe -
--------------------------------------------------------
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  #15 (permalink)
Elite Member
Toronto , Ontario, Canada
 
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JonnyBoy View Post
And one other thing, trading in SIM is great to learn the trading platform or to test a system, but it cannot ever replicate the 'feel' of trading with real money.

I used to think SIM was a total and utter waste of time (and have made that clear on many posts), but I have softened my stance in recent years for a few reasons I won't go into here.

When you go live, you will truly understand what it is all about.

Use Futures.io as much as you can. You won't regret it. By using the search function you will be amazed what has already been discussed before.

For sure, that is also many pointed out that trading with SIM is VERY different than live in terms of psychological. Because I am still learning the very basics, I am following many great journals here on the forums.


Thanks JonnyBoy for your time and feedback. I am noting everything you guys mention and always keeping in mind the thoughts and feedback many of you gave me.

Best,
John

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  #16 (permalink)
Elite Member
Toronto, Canada
 
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noobforlyfe View Post
Hello,

I am fairly new to the futures trading category and would like some advice and help on the following questions:

1) As someone who resides in Toronto, but wants to trade ES, how much money would you typically need to get started on Ninjatrader.
-(I.e., the minimum balance needed to start trading and if you go below that balance do you need to top it off to make sure you are always above or meeting the balance requirement?)


2) For tax purposes, how would it work? Does the broker send you a ("T4" ) at the end of the year and you just use that for income tax purposes? What is the tax rate applied in canada esp in ontario (toronto)? Do you have to submit any tax forms to IRS?

3) Since I would be trading on the US market, do you have to submit USD to open account or can you use CAD and trade? If you do CAD, then every time you make an entry and exit do you get charged for conversion fee?

4) Similar to Q#3, whatever profit or loss you make, it would be in USD so when the broker transfers the fund to your account, is it converted back into CAD?

Thank you for taking the time to read my thread and I hope someone can help me.

Best,

John

and by PM:

noobforlyfe - Tue, 26 Jul 2016 14:20:12 -0400
Hello,

My name is John, I have been trying to find information on how taxation would work if someone were to trade the ES from toronto, Ontario, Canada.

Most of the traders here are in USA and while some who are in Canada but not in Ontario offered their input, I'm still not sure how it works.

I was wondering if you can help me understand how you do your taxes if you trade the E-mini S&P 500 as a resident of Toronto. I tried to search it up on CRA, but their superfluous language has got me confused and not sure how to approach this.

I want to trade the ES, but before i even open a live account, I want to understand how I am taxed, at what rate and how do I show it at the end of the year. Usually in a normal employment, the employer gives me a T4, and I take that to my accountant and he does my taxes.

Would you be able to help me please?

Thank you for your time.

Best,

John


John,
I wouldn't presume to know all the ins and outs of the tax consequences for your particular situation. I think only a qualified tax professional can provide the answers you seek. If you are with a Canadian broker, you won't get a slip with your income on it at the end of the year to use in your tax return (i.e. you won't get a T5, T4 etc.). It will be up to you to calculate your income/loss and report it. Only a qualified tax professional will be able to help with that. Sorry that I don't have more specific answers. This is an area that is not straightforward. So sorry that I can not be of more help.

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  #17 (permalink)
Elite Member
Toronto , Ontario, Canada
 
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WOW CO View Post
and by PM:



John,
I wouldn't presume to know all the ins and outs of the tax consequences for your particular situation. I think only a qualified tax professional can provide the answers you seek. If you are with a Canadian broker, you won't get a slip with your income on it at the end of the year to use in your tax return (i.e. you won't get a T5, T4 etc.). It will be up to you to calculate your income/loss and report it. Only a qualified tax professional will be able to help with that. Sorry that I don't have more specific answers. This is an area that is not straightforward. So sorry that I can not be of more help.

Hey thanks, for your input on this. I'm just looking into this on the side and see if someone can help me understand how it usually works (assuming those who came before me. Sorry for the double similar questions. Was looking to get a collective input from individuals who trade from toronto, as laws may be different slightly from province to province.

Thanks though My accountant isn't too informed regarding this as he doesn't have clients trading commodities, he usually does taxes for families that works and small businesses. (I feel like he should still know more about different occupations, but it is what it is sadly and surprisingly)

Best wishes,

John

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  #18 (permalink)
Elite Member
Albany, NY USA
 
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You may find some useful information in this thread (I haven't read through it all myself). The OP was from Toronto as well:

https://futures.io/traders-hideout/29111-futures-tax-rate-canada.html

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  #19 (permalink)
Elite Member
Toronto , Ontario, Canada
 
Futures Experience: Beginner
Platform: Sierra Chart, SC
Favorite Futures: Emini ES, CL, USD/CAD
 
Posts: 185 since Jun 2016
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Elijah View Post
You may find some useful information in this thread (I haven't read through it all myself). The OP was from Toronto as well:

https://futures.io/traders-hideout/29111-futures-tax-rate-canada.html

Hey thanks for the referral link, I've fortunately been to that thread before but its good to see the answers offered there resonate with what I've got in this thread.

Thanks Elijah for taking the time to link and help me out, I appreciate it.

Best wishes to your health and trading.

John

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