What would be the terms of the leverege? I was thinking about investing 1000 USD and use leverege from some broker firm, put that money in some country with a hight interest rate, and "protect" myself by using "forward exchange contracts". What do you think?

Answer
All FX contracts are leveraged at about 10 to 1. If you used your $1000 to buy currency, you would have $10,000 worth of exposure. If your trade drops by around 5% you will either have to put more money in the account or it will be closed out.

An example of this trade is you can take your dollars and buy the Brazilian Real (BRL) which has an interest rate of 13%. To protect yourself you buy a 1 year forward contract, well guess what, the forward contract is priced at 13% so you will break even (minus trading fees).

You can take advantage of the forward curve (this is what forward rates are at the moment in countries such as brazil, indonesia and turkey as their forward rates are pricing in high interest rates) because the curves are priced for easing. If you buy a 2 year forward contract in brazil and the exchange rate doesn't move then you will make money.

This is quite a complex financial trade, read up on it first - i've put a couple of links below.

Forex trading is legal in india and also can we invest and use indonesia exchange? ?

Answer
yes my dear friend it is legal in india and many people are doing it. I think this question is very common in yahoo answers and many times it has been answered.

Regards

Q. I heard about Forex trading, but i really don't know much about it... for example, i am individual and i want to buy stocks in some companies.. Do i have the control in my stocks (like determining the time to buy or sell stocks) or it is only in the hands of the Forex company?... How about others like Gold?
Ok, let me make it clear... lets say i want to trade in stocks.. how can i do that? do i have to find a company to trade for me? but in this case, my stocks will be totally in the hand of the company.. how can i take control of my stocks (like buy or sell them) whenever i want?
Also, i also want to know if i want to sell all my stocks in specific company?
Can i do that by myself ? i mean what is the relation ship between the investor and the stocks company?

Answer
Forex trading and stock trading are completely different. Forex is gambling based on changes in geopolitics deemed likely to influence perceived currency values.

Stock trading is based o your purchase and/or subsequent selling of positions in individual companies. I trade (buy, sell or both) daily throughout the week but never bet in favor of or against currencies.

You can buy gold stocks on the stock market and Forex won't be your passport.

Len

Relationshiop Of Gold with US dollar?

can any one tell me is Gold has any relationship with US Dollar while we trading in forex in other words when Gold up can dollar of usd decline or also up any relationship

Answer
Gold has a safe haven status. It is used to hedge against a weaker dollar. Normally when dollar gets weak gold gets stronger, infact this use to be so in older days. Gold is not really living up to its safe haven status anymore. The inverse relationship between gold and the dollar is no longer an obvious given, as there are many other highly liquid assets out there that are just as safe, and even safer than gold whose value can just be as manipulated by central banks as the dollar value. But I will tell you something - at this point in time we are on uncharted territory. The currency markets are in for some rocky times ahead. Right now, and for the last few years, golds movement correlates with the stock markets movement. And the inverse relationship between gold and dollar is fading. What I am seeing today is a weak dollar against or vs strong other markets and not just gold.

Q. http://www.alpari.co.uk/

I know what the company does on a very brief note, such forex trading online using various software etc. But What I wanted to know is, what the hell is a PIP! also what is there jurisdiction limitations so what services can they offer and cant etc.

Also what makes a good online forex trading account etc. I was reading the not receiving re-quotes is good etc.

Answer
A pip, depending on the currency is 1cent so when trading Cable (GBP/USD) you place a trade with a profit limit level of x number of pips - 20 pips would be 20 cents and so on.

I use Alpari for the charts on the Metatrader platform they use - which you can download for free. Their spreads are pretty good, but for tax reasons I mostly use IG Index for trading, which is a spread betting platform.

Not sure about the jurisdiction limitations you refer to - without knowing which country you are based in. If you are based in the UK there are none I know of.

What makes a good account is stability of the platform (most FX providers tend to use Metatrader so that isn't really an issue) and speed of processing orders - you will get some slippage when the market is moving very quickly, the best way to minmise that is by using OTO orders (orders to open) that automatically trigger an order when a price reaches a certain level. Most important of course is the spread - e.g the number of pips the provider charges for entering a trade - which does vary enormously.

Financial Charts?

Good day,

My questions is how can i have financial charts on the website like forex, stocks,commodities etc without having to pay for them. As well as quotes themselves too. Thank you in advance.

Answer
hi ,
the following the answer for u question
the website used for advertisiment product not keep you private financial charts

ok..when I say my "entire life", what I mean is that I watched the 6:00 news tonight, which makes me an expert...in my house.
My expert prediction is that the market will come right back up in the next 2 market sessions, and the networks are trying to scare everyone and create the news.
I know my prediction isnt very complicated, which will make many market watchers be wary of it, but I bet I'm right.
The good news is that we will know by Monday evening.
The bad news is that the networks will start creating other news shortly there after.
re: maximus ....I'm no expert..just an idiot posting messages on yahoo...but when the market rebounds by monday, I will be a GENIUS! ;)
I dont know which market will rebound..I didnt know multiple markets needed rebounding...so I'll let you pick which one..then we'll both be GENIUS ;)

Answer
MSNBC, Bloomburg and the such like just create a load of hype... there is no way that any market professionals base their buy / sell decissions on the waffle on the goggle box.

you say "After spending my entire life studying the stock market..do I have it right..? "

well predicting the right market just once does not make you an expert... you say "the stock market" but what specific market? the dow, the nasdaq?...

"My expert prediction is that the market will come right back up in the next 2 market sessions, "
-- to what level? and for how long? .... eg. its easy to say "buy the market" but what market? and knowing *when* to sell is the other side of a successful trade. what are you basing your trading signal on? a flip of a coin, or genuine market knowledge and insight?

BTW - Each year, some financial magazine or news paper will get a monkey to throw darts at the stocks in the wall street journal... they usually perform quite well beleive it or not !!!

here is a way to prove you are an expert. By filming yourself and posting your (technical or fundimental) analysis on the net (youtube for example) you can allow people to see your prediction BEFORE the event... if you ARE a true market guru, then this will be apparent for all to see, and then, no doubt MSNBC will want you on their show :-)

i sometimes follow people who "predict" the FOREX markets on youtube.

All the best !

Answer
Hi there,

These are some sources i use for getting forex updates and Daily FX analysis:

http://forextradingguru.blogspot.com/

http://forexmoneymaker.blog.com/

http://www.finexo.com/marketReview

Also sites like actionforex.com and fxstreet.com are also quite good.

Cheers

What is forex?

What do one buy, the stocks of other country?
What do one buy, the stocks of other country's companies?

Answer
The Forex market is the buying and selling of foreign currencies. It is the largest financial market in the world with daily transactions exceeding $2 trillion dollars.

The are actually two different market places dealing with Forex and these are sometimes confused by people. The first is the Forex futures market where a trader is actually purchasing a position in a currency based on his determination that the particular currency will go up or down in price over a specific period of time.

The other is the Spot Forex market. Transactions in this market are made based on a "currency pair" for example the EUR/USD. This particular pair will go up in price if the EUR goes up in value in relation to the USD and it will go down in price if the USD goes up in value in relation to the EUR.

The Spot Forex is becoming more and more popular with regular retail traders since the internet has now made it possible for anyone to easily participate in the market. The issue is in the fact that the Forex market can provide very attractive returns on investment....but it can also very quickly deplete an unknowledgable traders account.

There are a number of Forex brokers that will allow you to open a free demo account and actually "trade" in the market without putting any of your hard earned money at risk. This is highly recommended to determine if you have the knowledge, the skills and the emotional fortitude to participate in this marketplace.

Good luck.

paul

Q.

Answer
The best VPS hosting company for forex trading is 3-Essentials. I've been using them to host all of my EA's (expert advisors) for over 2 years now, and I've never experienced any downtime.

Where can I find a reliable VPS hosting for forex trading ? Competitive price ?

Any recommendation ?
Thank You !

Answer
Amazon EC2. You can get a Windows Micro VPS for free for 1 year, and it will work just fine for forex trading.

Q. Anyone have gripes, complaints? Anyone satisfied with managed accounts? Obviously, more than 1.5 - 2% per month is nothing to complain about...

Answer
I'll be real honest with you. Managed accounts are okay but you can do much better if you spend the time studying the market yourself and learning the trading discipline.

Think of it this way, a managed accountant is not risking his own money, he's risking yours.

You could spend 6 months trading demo accounts, reading technical analysis books, etc. and learn the techniques yourself and do much better than a managed account.

Conservatively with forex you could make 5-10% per month. Using a well developed software tool 20-30% is easily acheivable. Best of luck to you.

is vip forex network (vipfx.biz) a place to swindle and scam people?

Q. A month ago. I made a deposit vipfx.biz,
when I try to make a withdrawal from my deposit,
According to this page which must be received within 24 hours,
it's been a month of this withdrawal request and I have not received anything.
I feel I have stolen my money
other friends of mine, who put their money on this site are in the same situation
If someone can guide me regarding this I would appreciate

Answer
As a 10+ year Forex trader, here is how I trade to make money...

If you want, you can also follow these steps. I've dumbed it down to the easiest, yet safest way to win in the Forex.

1) Open a live account at http://bit.ly/iPV25O
2) Select AAAFx broker, and open MICRO account with 200:1 leverage.
3) Deposit at least $300 in your account to start.
4) "Add to Portfolio" the top 20 strategies at http://bit.ly/mJiyZV
5) Don't add any strategy that makes less than 10 average pips per trade.
6) ...when adding strategies, set maximum number of trades to 5, and...
7) ...select lot size of 0.1 "mini" lots for each $1000 in your account.
8) It will trade automatically, following all those top 20 strategies.
9) Then sit back, relax and take a vacation as you make easy Forex money.

Q. http://www.alpari.co.uk/

I know what the company does on a very brief note, such forex trading online using various software etc. But What I wanted to know is, what the hell is a PIP! also what is there jurisdiction limitations so what services can they offer and cant etc.

Also what makes a good online forex trading account etc. I was reading the not receiving re-quotes is good etc.

Answer
A pip, depending on the currency is 1cent so when trading Cable (GBP/USD) you place a trade with a profit limit level of x number of pips - 20 pips would be 20 cents and so on.

I use Alpari for the charts on the Metatrader platform they use - which you can download for free. Their spreads are pretty good, but for tax reasons I mostly use IG Index for trading, which is a spread betting platform.

Not sure about the jurisdiction limitations you refer to - without knowing which country you are based in. If you are based in the UK there are none I know of.

What makes a good account is stability of the platform (most FX providers tend to use Metatrader so that isn't really an issue) and speed of processing orders - you will get some slippage when the market is moving very quickly, the best way to minmise that is by using OTO orders (orders to open) that automatically trigger an order when a price reaches a certain level. Most important of course is the spread - e.g the number of pips the provider charges for entering a trade - which does vary enormously.

Do UK Residents Pay Tax On Forex Profits?

Q. Well, simply put; do you need to pay tax on profits earned trading forex if you're in the UK, and at what percentage, and what amount?
It isn't really a case of 'of course', as spread better's don't.
What makes me question it is the following:

- Any foreign currency held for your own or your family's personal use outside the UK (for example, if you've made a gain because of a change to the exchange rate).

Answer
Petrusclavas: No wonder HMRC gets bad press, if you are to be regarded as a typical Officer. The training standards must have slipped since I did mine all those years ago. You just embarrass yourself with some of your attempts.

Where in a set of accounts will you see bank and cash? Definitely not in the trading account. You will see them in the balance sheet under assets. This is because a bank account and cash are capital asset. What does that tell you about any gain that may arise on those assets? A "capital" gain, perhaps?

In answer to the questioner, it is unlikely that you are trading. You are buying an asset that you hope will realise a gain, the same as you would buy stocks and shares (which also are capital assets). Any profits (gains) you make in a year may give rise to capital gains tax.

Would this be possible?

im 16, i spend about 10 hours on my pc a day usually, cant find a job in my local area so possibly i could resort to what i do best.

I have a Great Deal of experience in Flash Creating complex animations from 5-10k frames long.
Quite experienced in AdobePhotoshop [mainly photo editing,abstract art]
Experience in Macromedia Fireworks, Dreamweaver.
Can Create SemiPro Websites. Nothing like forums.
can create web furniture such as animated navigation menus, buttons, Banners, adverts and what ever else to suit target audiences and purposes.

Currently Studying Games Design and Learning C++ and 3d modelling.
always bored so earning money like this would be great where possible.

comments, could this work?
dont post spam links.

Answer
Earn money fast by trading forex(Trading Currencies). It is way safer than trading stocks and you can trade 24 hrs; Moreover, You can buy OR sell currency pairs, this means you can profit in both a rising and falling market. This is ideal in the current economic crisis.

Also it is very easy to learn since the forex market is very predictable. Many people have changed their $50 to $5000 in just a few days.
-----------------------------------------------------------------------------------------------
Marketiva is a forex broker that has been around for years, very reliable. I have withdrawn my money from them 26 times.

It will give you $5 free just to try trading forexï¼ï¼ï¼

When you sign up, $2.5 will be in your live funds, the other $2.5 will be in your live forex account. You can freely transfer money between accounts.

Moreover, they have a live support system that will answer your questions in different languages instantly (open 24 hrs). Also, they have chat rooms of more than 30 different languages.

Join now at: http://www.marketiva.com/?gid=27259


-----------------------------------------------------------------------------------------------
Etoro is another fantastic broker (you may trade currencies, gold, silver and other commodities as well) with an excellent platform for beginners and professionals. NO MORE boring tradings, with the visual graphics, trading at Etoro is like playing games. Also, you will receive up to $1000 after your initial deposit. For professionals, there are weekly contests where you can earn cash prizes for being a good trader!! Best of all, it is free to sign up!!!

Hurry up and Donât miss out on this great earning opportunity.

Join Now at http://www.etoro.com/B641_A15263_TClick.aspx




Check http://www.thefunstufftodo.com for more earning opportunities.

What would be your ideal website?

Q. If you could design a website, what would you want on it? What things do you always google for that you wish would just pop right up easily, or would already be locked in your favorites? Is there anything that could be combined, or made for better web surfing?

Answer
An ideal website that would have all the necessary tools at one click.
I mean similar to yahoo but when the page opens up you can access all tools without leaving that page, eg new yahoo email portal.

When one wants to access emails one can read and write in one window, no need to click and wait for the next page. Similaraly google email portal works. But, the ideal web site would combine all the tools in one portal same way as yahoo or google email portals.
You want to watch movie just type the name and movie streaming starts right away, or you have to read news just mouse over the news tab and you watch the news.
Similary, the service should contain a buy and sell portion for purchasing articles and items.
Blog is very important today.
I also want to add forex and stock market real time rates for the people who love to trade online.
Some advertising to earn the revenue to run the site.
The site should work when you type , the results are displayed instantaneously.
User friendly, visitors can save the preferences, now they want to look and feel the page when they start the page.

http://360.yahoo.com/jcbroogley

Q.

Answer
I think your understanding of risk is so rudimentary that you shouldn't be trading either.

First off the other poster who said that your risk in futures market is limited to the premium paid doesn't know the very most basic facts about what a futures contract is, has never traded even a single contract, and I can't imagine why he would answwer a question about it. Your potential losses in trading futures contracts can be unlimited.

Anyway, risk is about potential losses and volatility. Many commodities trading in futures markets are more volatile than most currencies (and certainly all major currencies). For example, natural gas has gone through long periods in which its volatility is 40%/month while major currencies have volatilities of about 8%/year. But the risk in the trade is not just the volatility of the underlier, but the leverage you are using to trade. There are some FX places that will give you 500:1 leverage and you will never get that in futures markets because exchanges just won't allow that.

Anyway, the risk on both can be controlled and you need to learn how to do that before you trade either. I've made lots of money for myself and other people traidng in both and at any minute I could tell you a whole raft of risk figures including VaR numbers, scenario analyses, factor decompositions, etc..

any recommendations?

I'm looking to invest my money in stocks. For the past 2 years I've had my money invested in real estate but want to try something new. I plan on investing about $350,000 and my friends all tell me to invest in gold, futures, or currency. I agree that these are good if bought at the right time. I just want to know where other people are looking.

Answer
It depends on your objectives. I'm sketchy about gold and I think the Forex is FAR too dangerous for individual investors despite what those advertisements for different trading platforms suggest.

I'd look for energy growth stocks -- companies that are bound to be snapped up by bigger players. Without going into specifics, there are some natural gas companies that are growing like mad and probably getting eyed up by the bigger names.

Don't listen to your friends. Do your own research or hire a pro.

Q. I am new to the forex market and am looking for a good trading system that actually works. Can someone point me in the right direction please?

Answer
Forex market or Foreign Currency Exchange market is one of the biggest trading market in the world with over USD 1.3 Trillion traded in a day. It is drawing attention ever since it is open to Online trading. Forex trading can be very profitable if you take your time to do a proper research, understanding various options and choose a system that works for you. The most used Forex trading system may not be the most suitable for your needs.

There are many different kinds of Forex Trading Systems and you need to know a few facts as mentioned below, before choosing and funding a system.

1. Testimonials: Is there anyone out there who is trying to sell a system and show you testimonials from the people who actually didn't like the system? Highly unlikely. You should do proper research before indulging into a system that is completely new to you.

2. Impression: Do not be over impressed from high percentage of winning forex trades because a 90-95% winning trades with with average value $10 gets you $900. If you have 10% losing trade and unfortunately average losing trade is $200, then your account is reduced by $2000. This is an explanation that people often tend to ignore while doing Forex Trading or any trading in general.

3. Profit: Do you want to work with a Forex Trading system that breaks even? Why? If you keep the money in your home, you will still break even, then why take all the hassles of setting up an Forex Trading account and do all the work. Really speaking, you should always do some research on how profitable a particular trading system is?

4. Drawdown: The maximum drawdown of trading system is defined as the greatest peak-to-valley drawdown in a trading systemâs equity. Maximum drawdown gives us a measure of the survivability of the trading system.

5. Time to profit: The actual time it takes to achieve the results with a particular trading system. You should plan to have a long and profitable relationship with your trading system.

Try to use a trading system that let you open a Demo account so that you can practice and learn about Forex Trading without risking any money.

I have tried many of these systems in my quest to simplify my trading experience. I personally have found FreedomRocks to be the system that has worked for me. I have found no bad information on this system from anybody that has actually used it. I have found many skeptics and bashers but nothing from those that have actually tried at least the free trial they offer.

Below are a couple of links that may that I have found in my travels around the web:
http://www.yourforexinvestor.com
http://www.babypips.com

To your success,
Brandon Wells
bjwells@yourforexinvestor.com
877-773-5345

How do I pay income tax on ForEx earnings?

I am doing normal daily trading of EUR/USD, trades lasting a few hours on average. I am not sure if this is considered futures or securities and I therefore don't know how to pay taxes on it.

Answer
NOTE: "Forex Taxes" are applies to U.S. traders only. Foreign investors that are not residents or citizens of the United States of America do not have to pay any taxes on foreign exchange profits!


Forex Trading Taxation - Definition and Overview:
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,...

More and more investors from all over the world are accessing the largest financial markets online through their personal computers. As demand surges for foreign exchange trading, more and more U.S. Traders have to deal with taxation issues at the end of the year.

Forex: Taxed as Futures or Cash?

Currency traders involved in the forex spot (cash) market, can choose to be taxed under the same tax rules as regular commodities [IRC (Internal Revenue Code) Section 1256 contracts] or under the special rules of IRC Section 988 (Treatment of Certain Foreign Currency Transactions). IRC 988 applies to cash forex unless the trader elects to opt out.

The Advantage of Section 1256 for Currency Traders Under Section 1256, forex traders can have a significant advantage over stock traders. By reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles), forex traders are allowed to split their capital gains on Schedule D using a 60% / 40% split. This means that 60% of the capital gains are taxed at the lower, long-term capital gains rate (currently 15%) and the remaining 40% at the ordinary or short-term capital gains rate, which depends on the tax bracket the trader falls under (as high as 35%). This results in an average rate of 23%, which is 12% less than the regular (short-term) rate.

If cash forex is subject to the Section 988 rules, how can a trader elect the more beneficial Section 1256 split? Please read on to find out more.

To Opt Out or Not to Opt Out of Section 988 !!

Companies that profit from the fluctuation in foreign exchange rates as part of their normal course of business, fall under Section 988. This means their gains and losses from foreign exchange (such as buying and selling of foreign goods) are treated as interest income or expense and get taxed accordingly. Consequently, they do not receive the beneficial 60/40 split.

Since forex traders are also exposed to daily exchange rate fluctuations, their trading activity falls under the provisions of Section 988 too - but don't worry. The IRS wants to be nice to you (so far). Because these daily fluctuations can be considered part of a currency trader's assets in the normal course of his business, the IRS gives the trader the option of rejecting (opting out) of Section 988 and electing that the gains be taxed under the favorable 60/40 split of Section 1256.

What do you have to do to opt out of Section 988? Even though you don't have to file anything with the IRS to opt out, you are required to do so "internally" before starting to trade; i.e., you must keep records in your own books about the fact that you are opting out of Section 988.

Many currency traders bend the rules by waiting after the year is over to see if they have any gains from their trading activities. If they do, they claim that they elected out of IRC 988 to enjoy the beneficial Section 1256 treatment. On the other hand, if the sum of the trades from cash forex is not positive, they stick with the traditional Section 988. Since (under the current tax law) it becomes very difficult to disprove whether the trader made the election at the beginning or at the end of the year, IRS has not yet begun to crack down on this activity.

What does a Forex Trader do When Tax Time Comes?

Forex traders should receive 1099 forms from their US-based broker at the end of the year like stock and futures traders do. No matter in what country your forex broker is based or what tax-related reports they provide, you could pull up reports online from your accounts and seek the help of a tax professional. No matter what you decide to do, don't fall into the temptation of lumping your trades with your section 1256 activity (if any). Forex transactions need to be separated into Section 988 reporting.

Given the fact that the forex market is one of the fastest-growing financial markets around, it might eventually come under closer IRS regulation. In the meantime, traders continue to enjoy tax advantages by trading foreign currencies.



...To find out More how You can Become a Profitable Trader on a Consistent Basis, Please Visit Here: http://www.urlpire.com/?MALFY - You Will Learn Valuable Ways and Tips to help You Make Money Trading the Forex Market !!

I'm relatively new to forex, however I wanted individual opinions, which would be better. GFT or Oanda and why? And if you have other suggestions of forex brokers please let me know!

Answer
Hi..there, I'm trying to answer the question

We've been with OANDA and things is very okay. Besides, OANDA is one of the honest forex brokerage. For Beginners, OANDA Platform may be a little complicated, but you could try the Practice account for unlimited time untill you feel comfortable with Java based website.

FXCM is okay too and no different with OANDA.

As a profesional, now I'm trying to open a limited membership website that provide high acuracy either in Forex, Commodity and Options. Please feel free to visit http://foropts.webs.com/ , but it's still under construction untill this mid 2011, but we open our door from now because we base our communication via email.

Thank you

Which Forex broker is more reliable.?

I have been trading on demo platform of Forex.com and Oanda. I found both the brokers very convenient on demo platform. I want to know which Broker is more reliable when it come to live accounts. People who have used anyone of them please let me know the feedback

Answer
I do have experience with Oanda and they are pretty stable and good system. No major issues for years. Besides that, they have a rather active traders dicussion forums. Good luck.

I am going to be paying income tax for the first time on some small earnings I made trading EUR/USD on the Foreign Exchange. I need to know if this type of trading is considered "commodities", subject to the 60/40 (23%) rate, or if this is considered "futures", and therefore 35% rate.

Answer
NOTE: "Forex Taxes" are applies to U.S. traders only. Foreign investors that are not residents or citizens of the United States of America do not have to pay any taxes on foreign exchange profits!


Forex Trading Taxation - Definition and Overview:
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

More and more investors from all over the world are accessing the largest financial markets online through their personal computers. As demand surges for foreign exchange trading, more and more U.S. Traders have to deal with taxation issues at the end of the year.

Forex: Taxed as Futures or Cash?

Currency traders involved in the forex spot (cash) market, can choose to be taxed under the same tax rules as regular commodities [IRC (Internal Revenue Code) Section 1256 contracts] or under the special rules of IRC Section 988 (Treatment of Certain Foreign Currency Transactions). IRC 988 applies to cash forex unless the trader elects to opt out.

The Advantage of Section 1256 for Currency Traders Under Section 1256, forex traders can have a significant advantage over stock traders. By reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles), forex traders are allowed to split their capital gains on Schedule D using a 60% / 40% split. This means that 60% of the capital gains are taxed at the lower, long-term capital gains rate (currently 15%) and the remaining 40% at the ordinary or short-term capital gains rate, which depends on the tax bracket the trader falls under (as high as 35%). This results in an average rate of 23%, which is 12% less than the regular (short-term) rate.

If cash forex is subject to the Section 988 rules, how can a trader elect the more beneficial Section 1256 split? Please read on to find out more.

To Opt Out or Not to Opt Out of Section 988 !!

Companies that profit from the fluctuation in foreign exchange rates as part of their normal course of business, fall under Section 988. This means their gains and losses from foreign exchange (such as buying and selling of foreign goods) are treated as interest income or expense and get taxed accordingly. Consequently, they do not receive the beneficial 60/40 split.

Since forex traders are also exposed to daily exchange rate fluctuations, their trading activity falls under the provisions of Section 988 too - but don't worry. The IRS wants to be nice to you (so far). Because these daily fluctuations can be considered part of a currency trader's assets in the normal course of his business, the IRS gives the trader the option of rejecting (opting out) of Section 988 and electing that the gains be taxed under the favorable 60/40 split of Section 1256.

What do you have to do to opt out of Section 988? Even though you don't have to file anything with the IRS to opt out, you are required to do so "internally" before starting to trade; i.e., you must keep records in your own books about the fact that you are opting out of Section 988.

Many currency traders bend the rules by waiting after the year is over to see if they have any gains from their trading activities. If they do, they claim that they elected out of IRC 988 to enjoy the beneficial Section 1256 treatment. On the other hand, if the sum of the trades from cash forex is not positive, they stick with the traditional Section 988. Since (under the current tax law) it becomes very difficult to disprove whether the trader made the election at the beginning or at the end of the year, IRS has not yet begun to crack down on this activity.

What does a Forex Trader do When Tax Time Comes?

Forex traders should receive 1099 forms from their US-based broker at the end of the year like stock and futures traders do. No matter in what country your forex broker is based or what tax-related reports they provide, you could pull up reports online from your accounts and seek the help of a tax professional. No matter what you decide to do, don't fall into the temptation of lumping your trades with your section 1256 activity (if any). Forex transactions need to be separated into Section 988 reporting.

Given the fact that the forex market is one of the fastest-growing financial markets around, it might eventually come under closer IRS regulation. In the meantime, traders continue to enjoy tax advantages by trading foreign currencies.



...To find out More how You can Become a Profitable Trader on a Consistent Basis, Please Visit Here: http://www.urlpire.com/?MALFY - You Will Learn Valuable Ways and Tips to help You Make Money Trading the Forex Market !!

How do I pay income tax on ForEx earnings?

I am doing normal daily trading of EUR/USD, trades lasting a few hours on average. I am not sure if this is considered futures or securities and I therefore don't know how to pay taxes on it.

Answer
NOTE: "Forex Taxes" are applies to U.S. traders only. Foreign investors that are not residents or citizens of the United States of America do not have to pay any taxes on foreign exchange profits!


Forex Trading Taxation - Definition and Overview:
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,...

More and more investors from all over the world are accessing the largest financial markets online through their personal computers. As demand surges for foreign exchange trading, more and more U.S. Traders have to deal with taxation issues at the end of the year.

Forex: Taxed as Futures or Cash?

Currency traders involved in the forex spot (cash) market, can choose to be taxed under the same tax rules as regular commodities [IRC (Internal Revenue Code) Section 1256 contracts] or under the special rules of IRC Section 988 (Treatment of Certain Foreign Currency Transactions). IRC 988 applies to cash forex unless the trader elects to opt out.

The Advantage of Section 1256 for Currency Traders Under Section 1256, forex traders can have a significant advantage over stock traders. By reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles), forex traders are allowed to split their capital gains on Schedule D using a 60% / 40% split. This means that 60% of the capital gains are taxed at the lower, long-term capital gains rate (currently 15%) and the remaining 40% at the ordinary or short-term capital gains rate, which depends on the tax bracket the trader falls under (as high as 35%). This results in an average rate of 23%, which is 12% less than the regular (short-term) rate.

If cash forex is subject to the Section 988 rules, how can a trader elect the more beneficial Section 1256 split? Please read on to find out more.

To Opt Out or Not to Opt Out of Section 988 !!

Companies that profit from the fluctuation in foreign exchange rates as part of their normal course of business, fall under Section 988. This means their gains and losses from foreign exchange (such as buying and selling of foreign goods) are treated as interest income or expense and get taxed accordingly. Consequently, they do not receive the beneficial 60/40 split.

Since forex traders are also exposed to daily exchange rate fluctuations, their trading activity falls under the provisions of Section 988 too - but don't worry. The IRS wants to be nice to you (so far). Because these daily fluctuations can be considered part of a currency trader's assets in the normal course of his business, the IRS gives the trader the option of rejecting (opting out) of Section 988 and electing that the gains be taxed under the favorable 60/40 split of Section 1256.

What do you have to do to opt out of Section 988? Even though you don't have to file anything with the IRS to opt out, you are required to do so "internally" before starting to trade; i.e., you must keep records in your own books about the fact that you are opting out of Section 988.

Many currency traders bend the rules by waiting after the year is over to see if they have any gains from their trading activities. If they do, they claim that they elected out of IRC 988 to enjoy the beneficial Section 1256 treatment. On the other hand, if the sum of the trades from cash forex is not positive, they stick with the traditional Section 988. Since (under the current tax law) it becomes very difficult to disprove whether the trader made the election at the beginning or at the end of the year, IRS has not yet begun to crack down on this activity.

What does a Forex Trader do When Tax Time Comes?

Forex traders should receive 1099 forms from their US-based broker at the end of the year like stock and futures traders do. No matter in what country your forex broker is based or what tax-related reports they provide, you could pull up reports online from your accounts and seek the help of a tax professional. No matter what you decide to do, don't fall into the temptation of lumping your trades with your section 1256 activity (if any). Forex transactions need to be separated into Section 988 reporting.

Given the fact that the forex market is one of the fastest-growing financial markets around, it might eventually come under closer IRS regulation. In the meantime, traders continue to enjoy tax advantages by trading foreign currencies.



...To find out More how You can Become a Profitable Trader on a Consistent Basis, Please Visit Here: http://www.urlpire.com/?MALFY - You Will Learn Valuable Ways and Tips to help You Make Money Trading the Forex Market !!

To set up a currency TRIANGLE ARBITRAGE transaction what procedure would i set up through a bank ( it would'nt be through a forex broker)? Checks, Money Orders (denominated and converted in multiple currencies)? My major USA bank does not deal in speculative investing?

Answer
Triangular arbitrage today is often done by computer programs by the big players, so I really don't think there's going to be much opportunity in it. Plus, you have to think there's going to be a transaction cost each time, which will really eat up your profits unless you're doing serious $ trading. If you are set on doing currency trading, you can try http://www.forex.com

Do forex robots really work has anyone tried one?

Answer
Do yourself a favor and ignore any answer that includes a link to any forex site.

Forex robots, Iraqi dinar, and penny stocks are the most frequent scams on Yahoo Answers.

If anyone had a robot (or system, or EA) that produced reliable profits, they would use it to trade themselves wealthy. They would not give it away. They would not sell it and arbitrage away their own profits. The concept is ridiculous.

Testimonials and internet reviews can be fake. Past track records can be fabricated.