12 ms·

That's not 100% accurate - rather how you make it sound like it works isn't quite right. Yes, all your trades are tracked and you will pay taxes on short term

by nmjohn 12y ago

That's not 100% accurate - rather how you make it sound like it works isn't quite right. Yes, all your trades are tracked and you will pay taxes on short term gains and can offset tax liabilities with losses. But that isn't something you - or your accountant does - your brokerage firm (any of them) will issue you a tax document (I can't think of the name at the moment) which summarizes everything for you - it gets inputed on your tax return, and you are done. However your last point - tends to be very true - unless you really know what you're doing, buying and holding is the way to go.

exelius 12y ago
Even if you do know what you're doing, it's still not a good idea. You're not likely to be successful without the resources of a large firm backing you up. Every arbitrage opportunity you can recognize will be completely priced in to the asset in the time it takes you to click "buy". Of course, anyone who know what they're doing knows this. Buy and hold is literally the only plausible strategy for an individual investor. If you want to invest with a specific trading strategy, find a fund that employs that strategy and buy that fund. I guarantee you that your trading strategy is not novel; if it works, someone has already done it.
- vasilipupkin 12y ago
  well, you can buy an index fund tracking ETF such as SPY or QQQ or any of the other ones and the trades would be free as opposed to through a normal brokerage. Using this doesn't equate automatically with day trading.
  - kasey_junk 12y ago
    It won't be free. There is always execution cost. One form that is mentioned in the article is the 3 days of float they are collecting on all of their client accounts. Now whether the execution costs on robinhood are greater or lesser than other platforms is up in the air. But it won't be free.
    - vasilipupkin 12y ago
      right. Well, they won't charge you a brokerage fee, at least
  - exelius 12y ago
    Right, but it's still a buy and hold strategy. People hear "free trades!" and the assumption is that it's a day trading platform, because $7 to execute a $5000 trade (which is roughly what a normal online brokerage charges) isn't an insane fee if you're pursuing a buy and hold strategy.
lutusp 12y ago
> unless you really know what you're doing, buying and holding is the way to go. The Wall Street Journal dartboard contest, which ran for several years, shows that, statistically speaking, even if you do think you know what you're doing, a buy & hold index fund is still a better choice than an active portfolio. http://www.investorhome.com/darts.htm http://www.investorhome.com/darts.htm Quote: "The pros barely edged the DJIA by a margin of 51 to 49 contests. In other words, simply investing passively in the Dow, an investor would have beaten the picks of the pros in roughly half the contests (that is, without even considering transactions costs or taxes for taxable investors)."
- deleted 12y ago
  [deleted]
ryandrake 12y ago
The brokerage won't necessarily do it all for you. Back when I used to gamble on the stock market, my broker would annoyingly only list sales in the document, and it was up to me to comb through my records for each trade's cost basis. Would be a total pain if I was making 10+ tiny trades a day.
- maxerickson 12y ago
  There was a rule change. See all the stuff about covered securities here: http://www.irs.gov/instructions/i1099b/ar02.html http://www.irs.gov/instructions/i1099b/ar02.html edit: Expanding a bit: brokers are required to track and report the cost basis of most securities purchased after 2010.
WalterBright 12y ago
Hah, I get those "tax documents" every year from the broker. They are frankly rather useless. I have to go back to the trade confirms to get the correct info. (For example, Etrade "forgets" what I paid for stocks and when I bought them after a few years, even if I bought them through Etrade.)

by nmjohn 12y ago

exelius 12y ago

Even if you do know what you're doing, it's still not a good idea. You're not likely to be successful without the resources of a large firm backing you up. Every arbitrage opportunity you can recognize will be completely priced in to the asset in the time it takes you to click "buy". Of course, anyone who know what they're doing knows this. Buy and hold is literally the only plausible strategy for an individual investor. If you want to invest with a specific trading strategy, find a fund that employs that strategy and buy that fund. I guarantee you that your trading strategy is not novel; if it works, someone has already done it.

vasilipupkin 12y ago
well, you can buy an index fund tracking ETF such as SPY or QQQ or any of the other ones and the trades would be free as opposed to through a normal brokerage. Using this doesn't equate automatically with day trading.
- kasey_junk 12y ago
  It won't be free. There is always execution cost. One form that is mentioned in the article is the 3 days of float they are collecting on all of their client accounts. Now whether the execution costs on robinhood are greater or lesser than other platforms is up in the air. But it won't be free.
  - vasilipupkin 12y ago
    right. Well, they won't charge you a brokerage fee, at least
- exelius 12y ago
  Right, but it's still a buy and hold strategy. People hear "free trades!" and the assumption is that it's a day trading platform, because $7 to execute a $5000 trade (which is roughly what a normal online brokerage charges) isn't an insane fee if you're pursuing a buy and hold strategy.

lutusp 12y ago

> unless you really know what you're doing, buying and holding is the way to go. The Wall Street Journal dartboard contest, which ran for several years, shows that, statistically speaking, even if you do think you know what you're doing, a buy & hold index fund is still a better choice than an active portfolio. http://www.investorhome.com/darts.htm http://www.investorhome.com/darts.htm Quote: "The pros barely edged the DJIA by a margin of 51 to 49 contests. In other words, simply investing passively in the Dow, an investor would have beaten the picks of the pros in roughly half the contests (that is, without even considering transactions costs or taxes for taxable investors)."

deleted 12y ago
[deleted]

ryandrake 12y ago

The brokerage won't necessarily do it all for you. Back when I used to gamble on the stock market, my broker would annoyingly only list sales in the document, and it was up to me to comb through my records for each trade's cost basis. Would be a total pain if I was making 10+ tiny trades a day.

maxerickson 12y ago
There was a rule change. See all the stuff about covered securities here: http://www.irs.gov/instructions/i1099b/ar02.html http://www.irs.gov/instructions/i1099b/ar02.html edit: Expanding a bit: brokers are required to track and report the cost basis of most securities purchased after 2010.

WalterBright 12y ago

Hah, I get those "tax documents" every year from the broker. They are frankly rather useless. I have to go back to the trade confirms to get the correct info. (For example, Etrade "forgets" what I paid for stocks and when I bought them after a few years, even if I bought them through Etrade.)