Trading short-term can lead to your gains being subject to income tax if not traded in a tax-sheltered account. It would be cool if we could input a theoretical income tax percentage for a backtest and see how that would affect our results.
Perhaps this feature would be best added in the strategy settings Tab?
Perhaps this feature would be best added in the strategy settings Tab?
Rename
As you know, trading taxes rates vary wildly depending on country, taxable income levels, payment deadlines, sudden tax cut and hike acts etc. Irrelatively to all this, throwing in some arbitrary number would just bring another rough estimate quite far from life.
Sorry to disagree, in the U.S., for example, the percentages are clear for taxing for short and long-term gains. For most people, short-term gains are taxed at the highest level (about 40%) and long term at 15%.
The point is to enter the values that are likely to apply to you. Withdrawing 40% of your profits to pay the tax can make a huge difference on a backtest. It's a realistic scenario that we could try to simulate.
I'll make this a feature request, and @micah - make sure to vote for it too.
Wash Sales are another big piece of this puzzle for non-tax-sheltered accounts.
The point is to enter the values that are likely to apply to you. Withdrawing 40% of your profits to pay the tax can make a huge difference on a backtest. It's a realistic scenario that we could try to simulate.
I'll make this a feature request, and @micah - make sure to vote for it too.
Wash Sales are another big piece of this puzzle for non-tax-sheltered accounts.
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Wash Sales are another big piece of this puzzle
Yes that's a problem, especially for buy-high strategies.
US Alternative Minimum Tax (AMT) is another problem, but that's too confusing to model here. Let's skip that.
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non-tax-sheltered accounts
Of course, you should be trading against a Roth IRA where capital gains are tax free; that's a no-brainer. You might want to talk to an estate planner about restructuring your estate to minimize your tax liability. For example, Schedule D income (stock capital gains) are highly taxed; Schedule E income not as much (although risk and gains may be unpredictable). Diversify.
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