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Hi Bryan,
You've mentioned the tax advantages of being a market maker a couple times
now. Could you please elaborate? As far as I can tell market maker status
isn't necessarily better than trader status, and usually is worse. The big
difference is that because profits and losses are ordinary income for market
makers and capital gains and losses for traders:
-- market makers can deduct losses greater than $3000 and traders can't
-- market makers can put trading profits into a qualified retirement account
(e.g. IRA) and traders can't
-- but market makers have to pay about 15.6% social security and medicare
tax and traders don't.
-- market makers don't have to worry about wash sales
So it seems that _if_ you have a losing year and _if_ you have alternate
income (e.g. from a spouse) to write your losses off against, then it is
better to be a market maker, but otherwise it isn't.
That self employment tax (social security and medicare) is a pretty big
disadvantage. Are there other differences that tip the scales toward being
a market maker?
Aaron Schindler
----- Original Message -----
From: "Bryan K. Mulholland" <speculator@xxxxxxxxxxxxx>
To: "Omega-List (E-mail)" <omega-list@xxxxxxxxxx>
Sent: Sunday, July 22, 2001 8:48 PM
Subject: RE: looking for retail day traders
> Hello Everyone,
>
> To all of those that have responded to my about my e-mail, here is a list
> of some of the firms that can do this great thing for you. But remember,
you
> have to be a licensed Series7 registered rep. through the NASD to trade
with
> what we are talking about. Heck, look at it this way, if you buckle down
and
> study for 6 months, you'll learn more about the overall picture of
> investments and in the end, you get a big giant tax break from Uncle Sam.
> Again, I know that this is not for everyone, but those with ability and
> small account sizes($30k-$100k), they can assist you to your $goals$
faster
> than you ever imagined. This is a powerful tool, and can also have just as
> much negative impact as positive, as it all depends on you!
>
> Here is a list of these type of offices:
>
> ActiveTrade http://www.activetrade.net/
> All - Tech Direct http://www.attain.com/about/branches.cfm
> Andover Trading http://www.andovertrading.com/
> Blackwood Trading http://www.blackwoodtrading.com/
> Broadway Trading http://www.broadwaytrading.com/
> Bright Trading http://www.stocktrading.com/
> BrookStone Trading http://www.brookstonetrading.com/
> Carlin Equities Corp. http://www.carlingroup.com/
> EchoTradeOnline http://www.echotradeonline.com/
> EdgeTrade http://www.edgetrade.com/index?ref=
> Electronic Trading Group http://www.etgtrade.com/where.html
> HeartLand Securities http://www.hrld.com/
> Hold Brothers http://www.holdbrothers.com/locations_2-4.html
> ICAP Direct http://www.icapdirect.com/index2.htm
> Lieber & Weissman http://www.stocktrade.net/
> Louisville DayTrade Exchange http://www.louisvilledaytrade.com/
> MarketWise
> http://www.marketwise.com/index2.cfm?CFID=2088838&CFTOKEN=39481606
> Momentum Securities http://www.trademomentum.com/
> Navillus Securities http://www.navillus.com/
> Off-Site Trader http://www.offsitetrader.com/CareerOpportunities.htm
> Onsite Trading http://www.onsitetrading.com/section01a.htm
> Onsite Trading for Series 7 licensed individuals
> http://www.onsitetrading.com/llc/defaul2.htm
> Point Direx Management http://www.pdgo.com/
> ProTrader http://www.protrader.com/
> Raptor Trading http://www.raptortrading.com/
> Summit Trading http://www.summittrading.com/
> SunState Trading http://www.sunstateequitytrading.com/
> Trinix Securities http://www.trinixsecurities.com/
> Watcher Tech Clients
http://www.watchertech.com/traders/traders-detail.html
> WorldCo http://www.wldc.com/html/index.htm
>
>
>
> Bryan K. Mulholland
> Honolulu, Hawaii
>
>
>
>
> -----Original Message-----
> From: Bryan K. Mulholland [mailto:speculator@xxxxxxxxxxxxx]
> Sent: Sunday, July 22, 2001 1:52 AM
> To: Omega-List (E-mail)
> Cc: Sigstroker@xxxxxxx
> Subject: RE: looking for retail day traders
>
>
> Hello Everyone,
>
> Maybe shedding some light on the subject, I happen to be one of those
> "stupid kind" of traders. It is a great advantage to trade the firms
> capital. Lets say that you have $xxk in your account, and that you have
most
> of that money tied up in short term positions in a few stocks. It gives
you
> the advantage to trade beyond your means during good times, or bad times
if
> you have no control. Up to 10 times of your account size in capitol. It is
a
> great tool for your trading, but it can be very disastrous if used wrong.
>
> They always have a risk manager that is watching everyone's position, so
> you can be put into reality if you do abuse the rules. But most people
have
> their head on straight, and the possibilities are endless to success with
a
> professional firm. Not every Daytrader has 2 million to trade what ever he
> likes no matter what the position. When I started out I had $30k, and it
> gave me the advantage to trade 1000 shares of JNPR, 500 shares of YHOO and
> 1000 shares of BEAS all at the same time. And doing that with only that
> amount. So if you have your head on straight, I don't see why you would
not
> pick up an opportunity like that.
>
> Second, lets talk commissions. On average, the direct access traders have
a
> commission of a complete trade at $13.00-$17.00. With trading
professional,
> the commissions drop to fractions of the cent per share. Traders starting
> off have the advantage of getting $.75 cents for trading 100 shares of
CSCO.
> So if you account size is small, a round turn on a trade only cost $1.50.
> With volume, the commissions per share dramatically reduce to almost
> nothing. I cut my cost of trade commissions by $68K last year by going
> professional. Now I don't think that is too stupid, do you?
>
> Thirdly, by trading in a large firm, you have to be a licensed Series7
> broker. That entitles you to trade the capitol, and receive a term called
> "Mark to Market". From the tax standpoint, all business expenses,
> commissions, and those great trips to New York to see the "Phantom of the
> Opera" are all deductions to the massive amounts of money you can make.
> There are no "Wash Sale Rules" when you are a professional trader. So the
> IRS can kiss my butt!
>
> I am not saying that it is for everyone. It gave me the ability to climb
to
> success faster than I ever imagined. I have met great people, made a ton
of
> money and feel proud that I do belong to a firm. I have made several
> "business trips" to New York, which my wife loves me for. The road has
been
> good. Now, I really can not speak for the firms that trade the futures
> markets with extra capitol, but I am sure that it is the same philosophy.
I
> take no offense to your comment on the "stupid" part, as I think for
anyone,
> it is the best thing to do. But you have your opinion as I have mine. I
hope
> that I helped out a little.
>
> Bryan K. Mulholland
> Honolulu, Hawaii
>
>
>
> -----Original Message-----
> From: [mailto:Sigstroker@xxxxxxx]
> Sent: Saturday, July 21, 2001 10:41 PM
> To: omega-list@xxxxxxxxxx
> Subject: Re: looking for retail day traders
>
>
> So let me get this straight. You want a sucessful daytrader, making
> consistent profits, to stop doing that and instead make profits for a firm
> and keep only a fraction of what they make? I would hope you'd get zero
> responses. Someone smart enough to be a successful trader is not stupid
> enough to screw themselves over in a deal like that.
>
>
> In a message dated 7/18/01 3:20:07 PM Pacific Daylight Time,
> writes:
>
> > I am looking for retail day traders also, but I don't think they
exist...
> I
> > posted a message about a month ago looking for traders who were
interested
> in
> > trading for a large firm (1000+ traders) trading firm capital with a
good
> > payout and generous amounts of trading capital. Guess how many people
> > answered that were SUCCESSFUL day traders who supported themselves
trading
> > and had track records to show (even records from profitable personal
> accounts?
> > ) ZERO!!! I got about 30 responses but not a single experienced trader.
> Maybe
> > the experienced guys had no interest in trading a firm's capital, but I
> found
> > it pretty suprising.
> >
> > So, just out of curiosity, who on this list trades for a living?
> >
> >
> > Just curious,
> >
> > Seth
> >
>
>
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