Misconception and assumption plague every industry and job title. Until you do the work yourself or hear from someone who does, you might not even realize that what you think you know about a profession is misguided. No exception to the rule, there are plenty of unfounded beliefs about day trading perpetuated by those who don’t really understand it.
It takes a certain type of person to succeed as a day trader. Anybody can do the market research and learn about trading strategies, but trading is about more than just following numbers and memorizing techniques by the book.
A day trader should be disciplined, but flexible; patient, but confident; and most importantly, be able to handle the ebbing and flowing of the market without having it affect how and when you make decisions. All of these ideal traits for success are based on the fundamental principles of trading psychology.
The potential for a large amount of profits in a short time period makes day trading an appealing profession (and sometimes even hobby) for many individuals. While the concept may sound simple, in reality it takes careful research, thoughtful strategy, and often a few months of experience to truly succeed as a day trader.
It’s easy to get caught up in the excitement of making quick moves on the market, which means it’s also easy to make mistakes that cost you big—literally.
As an active day trader, there can be many advantages to incorporating your trading enterprise. A lot of those perks pop up around tax season in the form of deductions. Forming your business and planning your tax strategy with a professional is the best way to fully leverage these deductions.
If you’re just getting started with your trading business, or beginning to consider taking the plunge into incorporation, you’ll have the additional advantage of claiming startup costs in the first tax year of operation. There are a few things about your business’ startup costs that you’ll want to keep in mind for tax time.
Serious day traders typically make the choice to form a business entity in order to separate their trading from their personal name, so that they may gain access to the tax benefits entities receive when it comes time to file.
As a day trader, it’s important to put substantial thought and effort into the details of how you’re going to form and run your business. That’s why working with the experts at Trader’s Accounting to form your trading business is the best next step for day traders who have decided to incorporate.
In the age of DIY and free tax software, it can be difficult to see the value in hiring a tax service to help you when it comes time to file. Many of us are of the mindset that there’s no good reason to pay someone else for something we can do ourselves.
While this philosophy makes sense for something simple, like washing your car or mowing your lawn, tax preparation is an entirely different beast. There are a lot of inconveniences and unexpected issues you may come across filing on your own, especially if you’re a self-employed or even an incorporated day trader. Read more
Navigating all of the legal and logistical requirements of forming and running your own business can be overwhelming. You need to be sure your operation is compliant on a local, state, and federal level in order to set yourself up for long-term success (that’s why we always recommend consulting a professional to help with the process).
One of the requirements for compliance that can sometimes be confusing is the designation of a Registered Agent. Especially if you’re running an active trading business, it can be difficult to determine what is really necessary to meet this requirement. Let’s break it down so you can make the right decision for your enterprise.
If you work as a day trader, incorporating your enterprise is a smart move. There will be a lot of considerations for you to make as you begin to make your business official—what type of entity you want to be, who (if anyone) will help you with operations, and which state is the most ideal for registration.