Trading for brokerage.

[Reggie]

Dr. Vinod, you have the experience trading the markets considering the turnover you have mentioned, and it seems you have laid a theoritical basis for a unique strategy to earn you an income. From a practical point of view, it seems wrong. However I do hope that you prove me and all other skeptics wrong. Wish you all the best.

Quote from Yogi Berra : In theory there is no difference between theory and practice, but in practice, there is.

 

[drvinod_k]

Hi Dravinod,

I thought u r a newbie i m sorry for that .since u said u r experienced i belive u might have gone through the cycle every trader has ,so u might came to the conclusion after analysed the real market very well.

My only doubt is how you ll eliminate the fear and greed because u have to book a profit more or less 0.05 - 0.1 .what will u do if the price go down immediately by 0.1 % after u bought or short will that is not called a loss.dont u have the pressure to book profit in next trade.

Regards,
Venkatesh

.

Hi Venkatesh,
The idea here is to trade near support and resistance levels that is where the charts come in real handy. Max volumes and price action happens near support and resistance levels. Since I will be trading in Index futures and Stock futures the volumes will provide me with a quick entry and exit. My maximum trades are in high volume counters like JPassoc, hdil, tatasteel, tatamotors, sbin etc. Regards pressure it is a matter of perception. I would say that I would be under least pressure as I shall keep a judicious stoploss for positions going against me suddenly. It is part and parcel of the market and bound to happen. The point is to execute maximum trades and in the process fractionally cover up for losses if any.

 

[drvinod_k]

@drvinod
see my post above.
No incentive to go for brkg refund scheme of yours.

I hope you understand difference between TDS & actual TAX payable !!!

Point noted Ethan. You see even if I have to pay tax as per the slab I would be happy to pay it. My CA shall see to it and I shall claim exemption for the TDS part. However I do not intend to limit myself to 5cr per day. With time I shall attempt to double it. There are people in the markets who do this and their volumes are way higher than mine. Like I said nothing is 100% sure in the markets. And I am targeting something which is sure for every trade. The trade may or may not be in my favour but with each trade I shall extract my pound of flesh.

 

[drvinod_k]

Dr. Vinod, you have the experience trading the markets considering the turnover you have mentioned, and it seems you have laid a theoritical basis for a unique strategy to earn you an income. From a practical point of view, it seems wrong. However I do hope that you prove me and all other skeptics wrong. Wish you all the best.

Quote from Yogi Berra : In theory there is no difference between theory and practice, but in practice, there is.

Thanks for the encouraging words Reggie. The markets are same for all with absolutely no bias towards any entity. The only difference is perception and attitude. What seems to be a sureshot recipe for disaster to the skeptics eye is an avenue of opportunity for me. The point is to execute what I believe in firmly with no emotions attached. Besides your signature sums it all if I may say so.

 

[Reggie]

Go for it I say!! Lots of things that at one time considered 'undoable' were revealed to be not so. As I said before, I really look forward to be proved wrong. Good luck and keep us posted on the developments.

Thanks for the encouraging words Reggie. The markets are same for all with absolutely no bias towards any entity. The only difference is perception and attitude. What seems to be a sureshot recipe for disaster to the skeptics eye is an avenue of opportunity for me. The point is to execute what I believe in firmly with no emotions attached. Besides your signature sums it all if I may say so.

 

[forexteam]

Hi vijayanscbe !

I want to ask you if it's possible to help me into this project (it's your thread):
http://www.traderji.com/advanced-tr...nced-support-resistence-trendlines-afl-8.html

I know that it's not the right post to ask, but I saw your last activity here, I hope that you will answer me.

Thank you
Best regards

I can understand his idea .......

i had similar thinking on seeing my 2009-10 ACC statement in that financial year

i gained 70k profit but my brokerage is 130k.....

but with 5yrs exp ..... IMO if u hav ability to make profit with brokerage return after overcoming all loss trades and taxes ...... am sure u can make huge profits from profits.... both the thing needs same skill :thumb:

 

[ethan hunt]

Point noted Ethan. You see even if I have to pay tax as per the slab I would be happy to pay it. My CA shall see to it and I shall claim exemption for the TDS part. However I do not intend to limit myself to 5cr per day. With time I shall attempt to double it. There are people in the markets who do this and their volumes are way higher than mine. Like I said nothing is 100% sure in the markets. And I am targeting something which is sure for every trade. The trade may or may not be in my favour but with each trade I shall extract my pound of flesh.

the Q is not CA will sort it out etc. but you will be paying more tax (in your scheme) compared to what you will pay if you trade for profit, so what is the use of going round in circles ?

provided:
brkg for (your scheme) = x
brkg refund (your scheme) = y

brkg (w/o your scheme ie profit trading scheme) = x-y

suppose you buy for 100
you sell for profit of = 4
total brkg = 10
kickback = 2
effective brkg = 10-2= 8
A = rs.2 + rs.4 = 6 is added to your income.
various charges taxes will be calculated on rs.10 brkg

suppose you buy for 100
you sell for profit of = 4
total brkg = 8
kickback = 0
effective brkg = 8
B = rs.4 is added to your income.
various charges taxes will be calculated on rs.8 brkg & will be less than above example. To cover these expenses you have to sell at a profit !!!

Real Income = 4 only where as in first example you are paying income tax on kickback also not to mention various satutry charges on differnece of rs.2 brkg to be paid extra.

Is my dummy calc correct ?

guys at IT dept are not fool to leave loopholes in system.

 

[drvinod_k]

the Q is not CA will sort it out etc. but you will be paying more tax (in your scheme) compared to what you will pay if you trade for profit, so what is the use of going round in circles ?

provided:
brkg for (your scheme) = x
brkg refund (your scheme) = y

brkg (w/o your scheme ie profit trading scheme) = x-y

suppose you buy for 100
you sell for profit of = 4
total brkg = 10
kickback = 2
effective brkg = 10-2= 8
A = rs.2 + rs.4 = 6 is added to your income.
various charges taxes will be calculated on rs.10 brkg

suppose you buy for 100
you sell for profit of = 4
total brkg = 8
kickback = 0
effective brkg = 8
B = rs.4 is added to your income.
various charges taxes will be calculated on rs.8 brkg & will be less than above example. To cover these expenses you have to sell at a profit !!!

Real Income = 4 only where as in first example you are paying income tax on kickback also not to mention various satutry charges on differnece of rs.2 brkg to be paid extra.

Is my dummy calc correct ?

guys at IT dept are not fool to leave loopholes in system.

.



I think the reference figures are not correct.
It is a clear transaction.
A) For eg. a transaction worth rs 1cr is done say rs 50lk buy and rs 50lk sell. On the said transaction the transaction charges including brokerage are 2400rs as per my agreement. Brokerage would be 1000rs. Of this I will be credited 750rs and 250rs will go to the broker. So I will have to pay Tax on 750rs and not on rs 1000. Another thing to be noted is that I do not intend to generate any profit from the said transactions just brokerage. Which ever way you examine it there is nothing beyond an open and shut case of income generated and the tax liability on it.
B) Now let us consider this as a conventional trade where one aims for profit.
rs 50lk buy and rs 50lk sell. Let us assume the brokerage is as per my agreement so one pays 2400rs for breakeven and anything beyond 2400rs is profit. Even if we assume that all trades were profitable one has to pay 30% of it as tax. At what point one books profits is purely subjective but the fact is that one has to pay 30% tax on whatever gains are generated.
Both the setups are high volume setups and hence low volume players have no say in this.
Set up A is purely intraday and has it's own advantages of fast entry fast exit and multiple trades. While setup B is totally subjective. Finally it is a matter of perception and belief. I believe in setup A and I know my liabilities before hand so I am comfortable with it.

 

[ethan hunt]

.



I think the reference figures are not correct.
It is a clear transaction.
A) For eg. a transaction worth rs 1cr is done say rs 50lk buy and rs 50lk sell. On the said transaction the transaction charges including brokerage are 2400rs as per my agreement. Brokerage would be 1000rs. Of this I will be credited 750rs and 250rs will go to the broker. So I will have to pay Tax on 750rs and not on rs 1000. Another thing to be noted is that I do not intend to generate any profit from the said transactions just brokerage. Which ever way you examine it there is nothing beyond an open and shut case of income generated and the tax liability on it.
B) Now let us consider this as a conventional trade where one aims for profit.
rs 50lk buy and rs 50lk sell. Let us assume the brokerage is as per my agreement so one pays 2400rs for breakeven and anything beyond 2400rs is profit. Even if we assume that all trades were profitable one has to pay 30% of it as tax. At what point one books profits is purely subjective but the fact is that one has to pay 30% tax on whatever gains are generated.
Both the setups are high volume setups and hence low volume players have no say in this.
Set up A is purely intraday and has it's own advantages of fast entry fast exit and multiple trades. While setup B is totally subjective. Finally it is a matter of perception and belief. I believe in setup A and I know my liabilities before hand so I am comfortable with it.

In A above:
You will get back 750 as income & pay tax on it. Effective brkg is 250.
You will pay tax on notional income as 750is your own money !!!

If you negotiate brkg at Rs.250 in first place you will get no kickback & so no tax. (also sat charges will be less than above, to cover it you will have to aim for a little profit).

Here we assume you do not trade for profit but get out of trade on breakeven.

Notice that you have to get out of trade at a higher price to cover diff in sat charges !!!
You may work out using exact charges a i have used a guess only.

 

[Venkatesh1985]

Dravinood,

Wt happen no update