Costs of trading

J

justforgroup

Registered User
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Given the costs below, I find it hard to believe that the little (Irish) guy can make any money trading? Is it really a fools game? It all seems exorbitantly expensive?

Costs:
Per [email protected]% (using TD Waterhouse standard rate): €22.50
Irish shares: Stamp duty @ 1% of transaction value
UK shares: Stamp duty @ 0.5% of transaction value
Capital Gains Tax @ 25% on profit
Income tax @ 20%/ 42% on dividends

So a simple example (note that these costs are PER TRADE)
Buying 100 CRH @ €10 will actually cost you:
€22.50 + €10.23 = €32.73

Selling 100 CRH @ €15 will actually cost you:
€22.50 + €15 + ((1500-1032.73)*25%) = €154.32

So CRH would have to rise by almost 19% merely to pay the €187.05 in costs!?

Does anyone really make any money trading or are they just ignoring these costs?
 
OP your calculations appear to be incorrect but saying that the Irish market is to illiquid to do short term trading
 
assume you buy 100crh at 10 and ignore the cgt at first
32.73+33.73=65.46 are fixed costs (using 11 as sale price for the sake of argument.)
so you will need 1065.46 after cgt to cover costs
so 65.46*100/75 = 87.28
so you need about 8.8% of a share price increase (to 10.88) just to break even.
But your point stands; it is not easy for the little guy to make big bucks with these charges.
 
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Would the fact that stampduty here being 1% have any bearing on the liquidity of the market? Would abolishing stamp help improve the market, after all it seems that the government makes more from the transactions than the broker.
 
Anything which reduces the cost of share trading would be a good thing, however it's CGT which is the real killer it seems.

I really have to question all these posts on AAM where the traders say they have made money - are they only looking at how much they made from the sale (i.e. bought for 10 and sold for 15), and completely ignoring CGT (assuming they're paying it of course :p)?

Is there ANYONE on AAM who can put their hand on their heart and say they have made a decent living out of trading?
 
justforgroup said:
Is there ANYONE on AAM who can put their hand on their heart and say they have made a decent living out of trading?
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I have done, but not in the past two years. Whilst there are those criticizing CGT, this Tax was lower in Ireland than many other euro countries for quite a number of years. What do you expect -- pay no tax on your profits.
 
I think the stamp is worse than the CGT, purely from the competitive point of view. Perhaps more companies would have primary or secondary listings here and maybe we'd have more choice in brokerages.
 
Shares purchased on the Irish market and sold within a 10 day period can have the stamp duty refunded.
 
I hate the stamp duty. It is really introduced for no reason. The government is worse than Ryanair.
 
mercman said:
Shares purchased on the Irish market and sold within a 10 day period can have the stamp duty refunded.
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I cant seem to find any reference to this anywhere. Is this done by your broker or do you have to claim it back yourself?
 
The broker should and normally will arrange the refund.
 
Yes, if there is no refference, i think broker should refund the money. When it comes to trading, one of the most neglected subjects are those dealing with trading psychology.


[broken link removed]
 
Peter P said:
Yes, if there is no refference, i think broker should refund the money. When it comes to trading, one of the most neglected subjects are those dealing with trading psychology.
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No, the most neglected subject are the costs ;-)
An individual trader just cannot make money when each share has to move such a large %, just to cover the trading costs.

Either people are not making their tax returns, or are fooling themselves into what is their actual profit margin.

I also note that no one has replied to post #8 that they have made a profit from trading; this is despite the thousands of posts giving investment tips etc.
 
So, justforgroup, your recommendations are ?? I'd love to hear them.
 
justforgroup said:
Given the costs below, I find it hard to believe that the little (Irish) guy can make any money trading? Is it really a fools game? It all seems exorbitantly expensive?

Costs:
Per [email protected]% (using TD Waterhouse standard rate): €22.50
Irish shares: Stamp duty @ 1% of transaction value
UK shares: Stamp duty @ 0.5% of transaction value
Capital Gains Tax @ 25% on profit
Income tax @ 20%/ 42% on dividends

So a simple example (note that these costs are PER TRADE)
Buying 100 CRH @ €10 will actually cost you:
€22.50 + €10.23 = €32.73

Selling 100 CRH @ €15 will actually cost you:
€22.50 + €15 + ((1500-1032.73)*25%) = €154.32

So CRH would have to rise by almost 19% merely to pay the €187.05 in costs!?

Does anyone really make any money trading or are they just ignoring these costs?
Click to expand...

Justforgroup,

Your figures are only based on a €1k share purchase, really dont understand what your point is?
 
+1.. Given the small size of your trading account and the short term nature implied in your post, you are using the wrong product to trade with. Generally, if you are aiming to scalp or close a trade within a month or two, you would do better by using CFDs or spreadbetting and pay the interest charges on your long position. The benefits are:
  1. To leverage your position
  2. And to escape paying stamp duty.
If you are planning to hold the investment say for 3 months or longer, the accumulation of long interest on CFDs would make it an unwise choice of product. And so the share trading route would be better..

I would just add these products should be only used by professional traders and not by novices.
 
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