Stocks & Commodities V. 29:5 (45): Q&A by Don Bright
Product Description
Stocks & Commodities V. 29:5 (45): Q&A by Don Bright
MARK TO MARKET ACCOUNTING
You have written about the tax advantages of being a professional trader versus a retail trader. You also mentioned something about mark to market accounting. Could you expand on these points? —JBelliott
Sure, glad to shed some light on this. If you were to buy 1,000 shares of GE at $20, yet it is now trading at $21, you have a mark to market profit of $1,000, even though you haven’t sold the shares yet. In my mind, this gives a better and truer reflection of where you really stand. On the other end, if you bought 1,000 shares of Google [Goog] a few months back at $640, and it’s now trading at $575, you have a mark to market loss, but not a capital gain loss. Some retail traders tend to almost kid themselves by saying, “I haven’t really lost any money because I haven’t sold the stock yet.” Well, as cute as that sounds, you really have lost money, no doubt about it.
MARK TO MARKET ACCOUNTING
You have written about the tax advantages of being a professional trader versus a retail trader. You also mentioned something about mark to market accounting. Could you expand on these points? —JBelliott
Sure, glad to shed some light on this. If you were to buy 1,000 shares of GE at $20, yet it is now trading at $21, you have a mark to market profit of $1,000, even though you haven’t sold the shares yet. In my mind, this gives a better and truer reflection of where you really stand. On the other end, if you bought 1,000 shares of Google [Goog] a few months back at $640, and it’s now trading at $575, you have a mark to market loss, but not a capital gain loss. Some retail traders tend to almost kid themselves by saying, “I haven’t really lost any money because I haven’t sold the stock yet.” Well, as cute as that sounds, you really have lost money, no doubt about it.
FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.
| Take Control of Your Trading. |
| Professional Traders' Starter Kit |
| All these items shown below only $299.99! |
| Click Here to Order |