Post by VirginiaBob on Jan 29, 2016 18:21:15 GMT -5
Please consult a tax professional on any strategies presented in this thread.
One strategy that I have used specifically with drawdown/averaging down type systems (such as the Improved Martingale System) works as follows for those that have both a taxable account and a non-taxable account (such as a Roth IRA), or even to a lesser degree a traditional IRA, where the taxes are deferred.
1. Buy #1, (or maybe Buy #1 and Buy #2, depending on your preference): Always make Buy #1 purchases in your taxable account.
2. Make all subsequent buys in your non-taxable account.
3. When you close the position, this will result in a loss in your taxable account and a gain in your non-taxable account.
This strategy basically transfers the money from your taxable account to your non taxable account, and allowing you to take a deduction for the loss (or offset other taxable gains). Next, some examples:
Let's look at a closed trade cycle from JAN 2016 for the Improved Martingale System:
Sold 9185 shares UGAZ at 2.77 on 8-JAN-2016, bought at various prices and dates: +$2350.90
79 shares UGAZ purchased 30-SEP-2015 for $6.33 per share.
185 shares UGAZ purchased 21-OCT-2015 for $5.43 per share
443 shares UGAZ purchased 26-OCT-2015 for $4.30 (at open)
552 shares UGAZ purchased 28-OCT-2015 for 3.62.
553 shares UGAZ purchased 17-NOV-2015 for 3.60. (at open)
1476 shares UGAZ purchased 25-NOV-2015 for 2.71
1477 shares UGAZ purchased 27-NOV-2015 for 2.59 (at open)
4420 shares UGAZ purchased 11-DEC-2015 for 1.78 (at open)
So you would buy 79 shares in your taxable account for 6.33.
You would buy all the other shares in your non-taxable account.
So your taxable account would see a loss of (2.77-6.33) x 79 = -$281.24
Your non-taxable account would see a gain of $2350+281.24 = $2,632.14.
So you effectively would have transferred 281.24 of wealth from your taxable account to you non-taxable account and would show a realized loss in your taxable account, which you may be able to deduct.
Try this same example with Buy #1 and Buy #2 in your taxable account and all the other buys in the non-taxable account and see how it turns out.
Any questions?
One strategy that I have used specifically with drawdown/averaging down type systems (such as the Improved Martingale System) works as follows for those that have both a taxable account and a non-taxable account (such as a Roth IRA), or even to a lesser degree a traditional IRA, where the taxes are deferred.
1. Buy #1, (or maybe Buy #1 and Buy #2, depending on your preference): Always make Buy #1 purchases in your taxable account.
2. Make all subsequent buys in your non-taxable account.
3. When you close the position, this will result in a loss in your taxable account and a gain in your non-taxable account.
This strategy basically transfers the money from your taxable account to your non taxable account, and allowing you to take a deduction for the loss (or offset other taxable gains). Next, some examples:
Let's look at a closed trade cycle from JAN 2016 for the Improved Martingale System:
Sold 9185 shares UGAZ at 2.77 on 8-JAN-2016, bought at various prices and dates: +$2350.90
79 shares UGAZ purchased 30-SEP-2015 for $6.33 per share.
185 shares UGAZ purchased 21-OCT-2015 for $5.43 per share
443 shares UGAZ purchased 26-OCT-2015 for $4.30 (at open)
552 shares UGAZ purchased 28-OCT-2015 for 3.62.
553 shares UGAZ purchased 17-NOV-2015 for 3.60. (at open)
1476 shares UGAZ purchased 25-NOV-2015 for 2.71
1477 shares UGAZ purchased 27-NOV-2015 for 2.59 (at open)
4420 shares UGAZ purchased 11-DEC-2015 for 1.78 (at open)
So you would buy 79 shares in your taxable account for 6.33.
You would buy all the other shares in your non-taxable account.
So your taxable account would see a loss of (2.77-6.33) x 79 = -$281.24
Your non-taxable account would see a gain of $2350+281.24 = $2,632.14.
So you effectively would have transferred 281.24 of wealth from your taxable account to you non-taxable account and would show a realized loss in your taxable account, which you may be able to deduct.
Try this same example with Buy #1 and Buy #2 in your taxable account and all the other buys in the non-taxable account and see how it turns out.
Any questions?