Forex - Profitable Systems

What Is Forex Trading?

Forex or foreign exchange is the term used for the trading of one currency for another. Such trading occurs on a daily basis especially in international business. The forex market is known as one of the largest global markets in existence and includes the trading of currency between banks, business corporations, governments, financial markets and many other sectors in business. An average of 3-4 trillion US$ are traded on the global forex market every day.

So What Makes This Market So Unique?

There are a number of factors that make this market unique, these are: - The volumes of currency traded on a daily basis. - The dispersion of global location where trading occurs. - The times at which trading can occur (24 hours a day, except weekends). - The number of factors that affect the currency exchange rate. - The margin of profit compared to other markets.

Who Are The Top 10 Currency Traders Globally?

The top 10 forex traders globally account for nearly 70% of all trading volume in the market. These banks have such influence as they always provide a buy and sell price for currency, thus allowing for a greater volume of trade. The following banks provide the greatest trade in forex:
1. Deutsche Bank ~ 21%.
2. UBS AG ~ 16%.
3. Barclays Capital ~ 9%.
4. Citi ~ 7%.
5. Royal Bank of Scotland ~ 7%
6. JPMorgan ~ 4%
7. HSBC ~ 4%.
8. Lehman Brothers ~ 3%.
9. Goldman Sachs ~ 3%.
10. Morgan Stanley ~ 3%.

Information.

The internet has become one of the most common places to find information on the forex market and on systems that can be used to take advantage of the market and create a small profit for yourself. One such example is the instant forex system which provides an innovative kit that reveals secrets about the forex market and how to utilise these secrets. The system doesn't even need any previous trading experience, just 5-10 minutes of your time per week. The system has many benefits and can be used even if you have a very low starting capital. No technical skills are required.

For more information on the instant forex system, visit:

http://doyouneedthis.net/businesseducation.aspx

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Pay Taxes For Forex Trading - US Traders

You finally start to profit and you are all excited about your just withdrawn cash when it suddenly hits you - what about taxes? How are my profits taxed and where should you report your income? What kind of documents should you fill in and how to keep IRC away from knocking on your door in the middle of a happy sunny day?!

I don't know about other countries (I promise to investigate though!), but US traders are definitely required to pay taxes for foreign exchange profits. It sucks, but that's the law, so unless you are planning to move to Europe or Middle East, you should continue reading!

US forex traders can choose to be taxed under the tax rules of regular commodities (IRC Section 1256 contracts). Another options is to be taxed under the special rules (IRC Section 988 - Treatment of Certain Foreign Currency Transactions)
Good thing about Section 1256 for forex traders is that when you report your capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles) you have the right to split your capital gains on Schedule D using a 60% / 40% split. What the hell is this split??

• 60% of the capital gains are taxed at the lower capital gains rate (currently 15%)
• the remaining 40% at the ordinary capital gains rate (as high as 35%).

What about Section 988? What is it and how to deal with it?
With Section 988 the gains and losses from forex are treated as interest income or expense and get taxed accordingly. There is no 60/40 split and, to make things even more complicated, since forex traders deal with daily exchange rate changes, the trading activity also falls under the provisions of Section 988. However, IRS isn't THAT evil - daily exchange rate changes can be considered part of a forex trader's assets, a normal part of your business. So IRS gives you an option of rejecting (OPTING OUT) of Section 988 and tax your gains under lovely 60/40 split of Section 1256.

How to get rid of (or OPT OUT) Section 988?
There is no need to file anything with IRS to opt out Section 988. However, you are required to do file "internally" before you even start trading for real. What do I mean by internally? You have to keep records about the fact that you are opting out of Section 988.
Majority of forex traders wait a year or so to see what kind of profit they get from forex trading and only then claim that they opt out of IRS 988. The last time I checked IRS can't really check whether a forex trader opt out Section 988 at the beginning of his trading activities or later on, and therefore IRS still let this trick pass.

How to pay your forex taxes?
US forex trader will get 1099 forms from his US-based forex broker at the end of the year. If your forex broker is based in another country you still have to get the reports and forms from your accounts and get some professional tax advice.

Forex trading is becoming more and more popular and eventually IRS will catch up with some new regulations. Meanwhile, try to enjoy the advantages of the current tax requirements on forex trading. And here is my advice - don't try to skip taxes!

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