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

  #1 (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
Thanks: 306 given, 151 received

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

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

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  #2 (permalink)
Elite Member
Edmonton, Alberta
 
Futures Experience: Beginner
Platform: NT
Broker/Data: Continuum, Global Futures, Ironbeam
Favorite Futures: ES, CL, GC
 
Posts: 6 since May 2016
Thanks: 1 given, 3 received


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

Hi John,

I just started trading ES a couple of months ago and this is what I've figured out so far.

1 - Your options for getting setup in Canada on NinjaTrader is very limited. You can use Interactive Brokers which has CDN based accounts but requires a $10K min investment and about $2,800 to trade an ES contract or you can do what I did, setup an account with Global Futures (min investment of $1K) and they only require $500 to take a ES contract. I've traded stocks for ages and just wanted to learn ES so I went with Global and an investment of $2500. After a month ive broken even and I consider that a win for a newbie. You will also need a $1,000 for a Ninja Trader license. All figures in US $.

2 - I don't think you get much from your broker (I'm not sure) but I keep track of my daily profit/loss on a spreadsheet. You don't have to report anything to the IRS (your broker will have you fill out a W8 to confirm you are a Canadian) but you have to report income to CRA. CRA considers daytrading to be a business activity and not an investment so you have to report income at your regular tax rate.

3 - You want to open a US $ account. In addition to my Global Futures account I also opened a TD US $ account an my Canadian branch and opened an account with the TD US bank in NY (easy to do online) so it is easier to transfer money between my US broker, US based bank account and then to my US Canada based account with minimal fees.

You will have to report any profits to CRA in Canadian funds so you will need to track the exchange rate in your spreadsheet.

4 - Just open everything in US dollars. If you use IB you may have the option to use CDN $, but any exchange could kill you. Even on my TFSA and RRSPs I use US accounts to save the exchange costs.

I hope that helps. I'm still learning myself someone with more experience might be able to fill in the parts I'm unsure about. Good luck!

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The following 2 users say Thank You to adaisguy for this post:
 
  #3 (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
Thanks: 306 given, 151 received


Hey Adaisguy,

Thank you for this very informative and helpful post. Everything was clear except point number 4 and one other thing.

Did you open a TFSA US $ account at TD? and give that as your bank account information to global futures?

Also, when you mentioned to keep a note of the exchange rate. Do you note down what was the exchange rate for every day you trade?

If you keep a tab of all the trades you take, and so forth. What do you submit as a legal proof that these were your trades and this is the profit, this is the loss?


Thanks for taking the time to inform me as well, and help me out. I appreciate your time.

Best,

John

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  #4 (permalink)
Market Wizard
Sarasota FL
 
Futures Experience: Intermediate
Platform: NinjaTrader, Sierra Chart
Favorite Futures: ES
 
Posts: 3,604 since Jan 2013
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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?)

I can only speak for #1, and the answer will necessarily be inexact, and will depend on the person.

With that said, there are many brokers who will open an account for US$500 or so. That is also the margin they require per contract for day trades (trades closed out the same day they are opened. These are set per broker; exchange requirements for trades held for more than 1 day are higher. You can check the CME website for details.) I have seen as low as $400 per contract margin requirement for day trading.

You can use the NinjaTrader platform with many brokers, although they do have their own brokerage. I believe their minimum for ES is $500.

In my veiw, anyone wanting to open an account that small is going to find that he can't last out any sort of adverse move, or very many trades not going essentially 100% his way. Don't waste the money opening an account of this size -- you will find out how fast it can go down the drain.

As to what it "should" be, that is very individual, but "higher than you really want" is not a bad rule of thumb.

So, for instance, $5,000 is much smarter than $500. And probably still too small. It is not a game for people who are in tight circumstances, I'm afraid.

Many people on this forum would have said something like $25,000. Although it is very individual, so is your ability to trade and to handle the losses that will come. Don't be discouraged by these numbers, but don't be underfunded, either. Not being able to withstand some losses may be the main cause of account blowouts -- if for no other reason, your mind starts going off-track when you are losing more than you can afford.

Bigger is generally going to be better here.

Bob.

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  #5 (permalink)
Elite Member
Calgary, Alberta
 
Futures Experience: Intermediate
Platform: NinjaTrader 8
Broker/Data: Kinetick
Favorite Futures: ES
 
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adaisguy View Post
Hi John,

I just started trading ES a couple of months ago and this is what I've figured out so far.

1 - Your options for getting setup in Canada on NinjaTrader is very limited. You can use Interactive Brokers which has CDN based accounts but requires a $10K min investment and about $2,800 to trade an ES contract or you can do what I did, setup an account with Global Futures (min investment of $1K) and they only require $500 to take a ES contract. !

That is quite strange. I had to close down my account at Global Futures as RGC was no longer able to service Canadian accounts. What clearing firm do you go through if you are still at Global?

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  #6 (permalink)
Elite Member
Edmonton, Alberta
 
Futures Experience: Beginner
Platform: NT
Broker/Data: Continuum, Global Futures, Ironbeam
Favorite Futures: ES, CL, GC
 
Posts: 6 since May 2016
Thanks: 1 given, 3 received


noobforlyfe View Post
Hey Adaisguy,

Thank you for this very informative and helpful post. Everything was clear except point number 4 and one other thing.

Did you open a TFSA US $ account at TD? and give that as your bank account information to global futures?

Also, when you mentioned to keep a note of the exchange rate. Do you note down what was the exchange rate for every day you trade?

If you keep a tab of all the trades you take, and so forth. What do you submit as a legal proof that these were your trades and this is the profit, this is the loss?


Thanks for taking the time to inform me as well, and help me out. I appreciate your time.

Best,

John

As for the bank, no you cannot fund it through a TFSA as far as I know. To get the money to Global Futures you need to send a cheque or a wire transfer. I opened a bank account at a TD Bank based in the US so I could fund my GF account using an ACH Wire Transfer (only available to US banks). If you don't want to open an account based in the US then you can send a wire transfer from your Canadian account - it just costs more to send and receive. TD in the US has an account with no fees as long as you keep $100 in there at all times.

I keep track of the exchange rates at the beginning of the year, the end of the year and whenever I make a deposit or withdrawal. CRA has a number of record keeping options depending on how much you trade. Just search the CRA website about Capital Gains in a foreign currency. I just happened to use this spreadsheet when I traded US option in a non-registered account and it seemed to work out well. As confirmation of your trades you can print out your statements from Ironbeam from their website. This is my first year so they may send out a tax form but it would be a US document anyway.

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The following user says Thank You to adaisguy for this post:
 
  #7 (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
Thanks: 306 given, 151 received


adaisguy View Post
As for the bank, no you cannot fund it through a TFSA as far as I know. To get the money to Global Futures you need to send a cheque or a wire transfer. I opened a bank account at a TD Bank based in the US so I could fund my GF account using an ACH Wire Transfer (only available to US banks). If you don't want to open an account based in the US then you can send a wire transfer from your Canadian account - it just costs more to send and receive. TD in the US has an account with no fees as long as you keep $100 in there at all times.

I keep track of the exchange rates at the beginning of the year, the end of the year and whenever I make a deposit or withdrawal. CRA has a number of record keeping options depending on how much you trade. Just search the CRA website about Capital Gains in a foreign currency. I just happened to use this spreadsheet when I traded US option in a non-registered account and it seemed to work out well. As confirmation of your trades you can print out your statements from Ironbeam from their website. This is my first year so they may send out a tax form but it would be a US document anyway.

Hey,

Alright I will take a look at the CRA's website regarding the Capital Gains in a foreign currency. Thanks for all the help and information.

I truly appreciate it.

Best,

John

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  #8 (permalink)
Elite Member
Edmonton, Alberta
 
Futures Experience: Beginner
Platform: NT
Broker/Data: Continuum, Global Futures, Ironbeam
Favorite Futures: ES, CL, GC
 
Posts: 6 since May 2016
Thanks: 1 given, 3 received


JonnyBoy View Post
That is quite strange. I had to close down my account at Global Futures as RGC was no longer able to service Canadian accounts. What clearing firm do you go through if you are still at Global?

Ironbeam services Canadian accounts and allows NinjaTrader. It is very strange that they do not advertise that on their website but my broker said that is the agreement they have with NT.

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  #9 (permalink)
Elite Member
Edmonton, Alberta
 
Futures Experience: Beginner
Platform: NT
Broker/Data: Continuum, Global Futures, Ironbeam
Favorite Futures: ES, CL, GC
 
Posts: 6 since May 2016
Thanks: 1 given, 3 received


noobforlyfe View Post
Hey,

Alright I will take a look at the CRA's website regarding the Capital Gains in a foreign currency. Thanks for all the help and information.

I truly appreciate it.

Best,

John

No problem,

Good Luck!

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  #10 (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
Thanks: 306 given, 151 received



bobwest View Post
I can only speak for #1, and the answer will necessarily be inexact, and will depend on the person.

With that said, there are many brokers who will open an account for US$500 or so. That is also the margin they require per contract for day trades (trades closed out the same day they are opened. These are set per broker; exchange requirements for trades held for more than 1 day are higher. You can check the CME website for details.) I have seen as low as $400 per contract margin requirement for day trading.

You can use the NinjaTrader platform with many brokers, although they do have their own brokerage. I believe their minimum for ES is $500.

In my veiw, anyone wanting to open an account that small is going to find that he can't last out any sort of adverse move, or very many trades not going essentially 100% his way. Don't waste the money opening an account of this size -- you will find out how fast it can go down the drain.

As to what it "should" be, that is very individual, but "higher than you really want" is not a bad rule of thumb.

So, for instance, $5,000 is much smarter than $500. And probably still too small. It is not a game for people who are in tight circumstances, I'm afraid.

Many people on this forum would have said something like $25,000. Although it is very individual, so is your ability to trade and to handle the losses that will come. Don't be discouraged by these numbers, but don't be underfunded, either. Not being able to withstand some losses may be the main cause of account blowouts -- if for no other reason, your mind starts going off-track when you are losing more than you can afford.

Bigger is generally going to be better here.

Bob.

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

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