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TradeStation offers two types of equities accounts: margin and cash.
Through our securities lending division, TradeStation has built numerous relationships with various broker-dealers, giving clients access to a larger-than-normal number of equities for short sale.
If an equity is not "easy to borrow," clients may contact the Equities Trade Desk and we will attempt to locate shares for you to short. A Trade Desk representative will enter your order on the platform. You will then be able to modify/cancel the order yourself. There is no additional charge for this service. Please visit our Contact Us page for Trade Desk hours and more information.
*Short-debit fees are applicable
As a TradeStation client, you have the ability to trade securities on all listed exchanges (Nasdaq, Nasdaq BX, NYSE, NYSE AMEX, NYSE Arca, BATS, BATS Y, EDGX, and EDGA) as well as OTCBB and Pink Sheets securities.
TradeStation connects and routes to all of the major options exchanges and allows clients to place options orders up to and including four legs.
You have three buying power indicators in your margin account(s), which work as follows.
Your day trade marginal equities buying power figure is based on the premise that the stock you are purchasing is set to the 25% day trade requirement. Certain equities, for risk-related reasons, may be set at a higher margin requirement (50%, 75%, etc.). Any equity that carries a margin requirement higher than the 25% day trade rate can be found on the Special Margin Requirements page in the TradeStation Client Center. To determine the dollar amount of a security that can be purchased or sold short, you can use the following formula:
Day Trade Buying Power (DTBP) x .25/SMR%
You wish to purchase SKF, which carries a 75% requirement, and your current DTBP is $200,000. How much SKF can you purchase?
($200,000 x .25)/.75 = $66,666
You can purchase up to $66,666 worth of SKF.
You wish to short SDS, which carries a 75% requirement, and your current DTBP is $350,000. How much SDS can you sell short?
You wish to short HGSI, which carries a 60% requirement, and your current DTBP is $300,000. How much HGSI can you sell short?
($350,000 x .25)/.60 = $145,833
You can sell short up to $145,833 worth of SDS.
You wish to short HGSI, which carries a 75% requirement, and your current DTBP is $300,000. How much HGSI can you sell short?
($300,000 x .25)/.75 = $100,000
You can sell short up to $100,000 worth of HGSI.
Generally, options contracts that close in-the-money by $.01 or more on the last trading day before expiration will be auto-exercised. You must ensure that sufficient buying power is in the account if you plan on being exercised or assigned. Short option holders do not have any control over when assignments will occur; only the probability of such can be estimated. No options traders can know when stocks will be halted from trading or removed from Ex by Ex-automatic "in-the-money" exercise processing at the Options Clearing Corporation (see its website for memo releases).
If sufficient equity or buying power is not in the account, or if you wish to avoid taking possession of the underlying assets of an options contract that may lead to a highly margined transaction and substantial risk exposure, the options position or strategy may simply be unwound by taking market action before the expiration of trading. TradeStation reserves the right to close out any options position or deny an auto-exercise of such if an account has insufficient equity or buying power to collateralize the resulting transaction. Account owners are responsible for all options-related transactions and financial obligations in their accounts.
No. Trading short is only allowed in margin accounts; therefore, if you are eligible to complete an application online, it is imperative that you apply for margin.
Note: All applicants using a paper application, if qualified, will automatically be given margin permissions. If you decide that you do not want a margin account, please contact an account representative at 800.808.9336.
Based on FINRA day trading rules, any properly qualified margin account that places four or more day trades within five business days is deemed to be a pattern day trading account.
Pattern day trading accounts must maintain an account net worth (both beginning day and real-time) of at least $25,000 USD. If the account net worth falls below $25,000, trading is restricted to closing transactions until the account equity is increased above $25,000.
On a one-time basis, you may elect to either:
Once a pattern day trading account is classified as such, we do not permit you to reclassify it as another account type. Any opening transaction in a pattern day trade account could (upon its liquidation) be deemed a "day trade." If we allowed this to happen after the account net worth falls below $25,000, your account would be subject to regulatory restrictions for up to 90 days. You must therefore either re-fund your pattern day trading account net worth above $25,000 to resume trading or open one of the "non-pattern day trading accounts" referenced above.
If your non-pattern day trading account net worth appreciates above $25,000, the non-pattern day trading account limitations will still apply.
If you wish to trade without those limitations, you may transfer your equity back to the original pattern day trading account. TradeStation discourages and may elect to restrict excessive transfers between pattern day trading accounts and non-pattern day trading accounts.
PLEASE NOTE: The information provided in this section is general in nature and should not be considered tax advice. For more information regarding tax matters, please consult your tax advisor.
Cost basis is the original price of an asset, usually the purchase price plus commissions. In addition, adjustments for wash sales, stock splits, spinoffs and other corporate actions may be made during the time the asset is held by a customer. Upon sale of the asset, costs for commissions and fees are deducted from the proceeds. The cost basis is used to calculate capital gains and losses, depreciation and return on investment.
As mandated by the Emergency Economic Stabilization Act of 2008, TradeStation is responsible for reporting to the IRS its customers' cost basis and short- and long-term gains or losses on the customers’ Consolidated Form 1099-B. This is intended to simplify year-end tax preparation, as Form 1099-B provides a complete, accurate accounting of the cost basis and gains/losses for the year. TradeStation is not responsible for reporting to the IRS cost basis and gain/loss information for equity positions purchased before January 1, 2011.
Form 1099-B reports a sale’s gross proceeds less commission. Brokerage firms are required to communicate cost-basis information to one another, so equity purchases made in the current tax year and transferred to TradeStation should be transferred with the cost-basis information. The 1099-B now shows the following additional information below for covered securities:
A tax lot is established whenever you open a new position via a purchase or short sale in a security. You can have multiple tax lots within the same security as a result of multiple purchases, or you can have a single tax lot within the same security as a result of a partially filled order.
A tax lot relief method determines the selection of which lots of a security will be liquidated first in a given transaction. In addition to selecting which lot of a security will be sold, it also identifies the associated cost basis and holding period, which are used in computing the gain or loss, and whether or not it is long term or short term. When considering specific tax strategies, you need to be aware of the potential tax consequences of your trading activity for the entire year. There may be benefits to applying a different tax lot relief method in different accounts, or in the sale of some specific covered positions.
The default lot relief method for all asset classes is first-in, first-out (FIFO). We are required by law to apply FIFO unless you specifically instruct us to use another method. The following lot relief methods are available:
You may configure the default lot relief method to be used for each security type (stocks, ETFs, options, and mutual funds) within each account, as well as per position, using the Gain/Loss Tax Management feature in the Client Center.
The default tax lot relief method for all asset classes is first-in, first out (FIFO). However, if you prefer to set a different tax lot relief method for a given security type (stocks, ETFs, options, or mutual funds) you can do so through the Gain/Loss Tax Management feature in the Client Center.
Clients have until December 31, 2016, to inform TradeStation that they are electing to report their mutual funds’ cost basis using a FIFO method. We will adjust the data for trades placed in 2016, but not for those made prior to the 2016 tax year. Send your notification via email to firstname.lastname@example.org.
Or mail to:
ATTENTION: Client Services - Mutual Funds FIFO Method
8050 SW 10th Street, Suite 2000
Plantation, FL 33324
Please provide the following information:
Joint Name (if applicable):
I/We wish to elect the first-in first-out (FIFO) method of cost accounting for the mutual fund covered shares held in the accounts listed below. List account number(s) covered by your selection:
If you have any tax-related or accounting questions regarding your election, please consult with your tax advisor. For non-accounting questions, call our Client Services Department at 800.822.0512 or 954.652.7900.
The default tax lot relief method for all asset classes is first-in, first out (FIFO). However, if you prefer to set a different tax lot relief method for a given security type (stocks, ETFs, options, and mutual funds) you can do so through the Gain/Loss Tax Management feature in the Client Center.
You can view the tax lot information for both your open and closed positions through the Gain/Loss Tax Management feature in the Client Center. For each security a summary row is provided that, once expanded using the (+) icon, will display information about the individual underlying lots.
TradeStation is not responsible for, nor required to provide, cost basis for non-covered positions transferred into your TradeStation account. In addition, TradeStation is only required to report cost basis for covered securities purchased on or after January 1, 2011, and transferred into your account if the transferring firm provided valid cost-basis information.
You can edit the cost basis of your unsettled transferred positions or unsettled uncovered positions under the Tax Lot Transfers tab of the Gain/Loss Tax Management feature in the Client Center.
Non-resident aliens with a W-8 on file and C corporations are not subject to cost-basis reporting. S corporations are subject to cost-basis reporting.
Covered securities are those for which TradeStation is responsible for reporting to the IRS gain/loss and cost-basis information. This includes all securities you purchased on or after January 1, 2011, with the exceptions of fixed-income and options securities, which were covered effective January 1, 2014.
Non-covered securities are those for which TradeStation is not responsible for reporting to the IRS. They include any positions established prior to January 1, 2011.
Your unrealized gains and losses are the difference between the current price of the positions you hold and their purchase price, reflecting how much the positions have gained or lost since you bought them. If you close one of these positions, the gain or loss will become realized, or completed.
When you sell an asset at a higher price than you paid for it, the difference between the purchase price and the sale price is your capital gain. For example, if you buy 100 shares of stock for $20 a share and sell them for $30 a share, you realize a capital gain of $10 a share times 100 shares, or $1,000. If you own the stock for more than a year before selling it, you have a long-term capital gain. If you hold the stock for less than a year, you have a short-term capital gain.
When you sell an asset for less than you paid for it, the difference between the purchase and sale prices is your capital loss. For example, if you buy 100 shares of stock at $30 a share and sell them at $20 a share, you will realize a capital loss of $10 a share times 100 shares, or $1,000.
TradeStation has opted to use the IRS default method of first-in, first-out (FIFO) and specified lot. The first method, FIFO, means that shares purchased first are sold first.
A wash sale is the result of selling a security at a loss and buying it back within 30 days of the sale date or purchasing it within 30 days prior to the sale date. The total wash sale period is 61 days: 30 days before the sale date and 30 days after.
The loss that would have been incurred for the shares sold is disallowed and added proportionately to the basis of the replacement shares. In addition, the holding period for the shares you sold is added to the holding period of the replacement shares. The disallowed loss will be obtained when the replacement shares are sold.
TradeStation reports wash sales for identical covered securities (same CUSIP) purchased and sold in the same account. In addition, wash sales do not need to be reported for securities transferred in or between accounts within TradeStation. Clients should report on substantially identical securities across accounts for covered and non-covered securities, as they always have.
As a part of the Emergency Economic Stabilization Act of 2008, TradeStation is responsible for reporting its customers' cost basis, short- and long-term gains or losses and wash sales to the IRS via the revised Form 1099-B. Previously, we were required to report only the gross proceeds less commissions of a sale.
TradeStation is not required to report wash sales for accounts for which you made a valid "mark-to-market" election under IRS code section 475(f)(1).
Please consult with your tax advisor and/or refer to Publication 550 (Investment Income and Expenses) on how to make the mark-to-market election with the IRS. Once you receive confirmation of your election from the IRS, notify TradeStation, in writing (email is acceptable), of the identity of your TradeStation accounts as solely containing securities subject to the election. If you made such an election with the IRS and you fail to notify us, we will report your wash sales, possibly subjecting you to income tax reporting discrepancies.
Upon receipt of your election under IRS code section 475(f)(1), we will refrain from reporting wash sales in the referenced account(s) for future tax years unless and until you subsequently inform us, in writing (email is acceptable), that the election no longer applies to you or to the account(s). If so informed, we will prospectively report wash sales for your account(s).
Please download, complete and submit the Mark to Market Election - Exclude Wash Sale form to opt out of wash sale reporting, subject to qualification.
For the current tax year, TradeStation will not be reporting cost basis for IRA accounts to customers or the IRS. Cost basis may be reported to customers for informational purposes, but as this is not currently required by the IRS, cost-basis pages will only display IRA cash balances.
For mutual funds, TradeStation uses average cost as its default cost-basis accounting method. If you wish to use the average cost method, no action is required at this time. Average cost for an account is calculated by adding up the cost of all covered purchases in the account (made after January 1, 2012) and dividing that total by the number of covered shares in the account. Under the average cost method, shares are redeemed in first-in first-out order, but the cost basis for all shares will be the calculated using average cost. TradeStation also provides FIFO as a cost-basis accounting method as an option for mutual funds. For more information, please contact your tax adviser or accountant.
For ETFs, TradeStation uses FIFO as its default cost-basis accounting method.
Gain/loss statements with or without wash sale adjustments for the current year, as well as several previous years, are made available to view or download as PDF files under the Reports tab of the Gain/Loss Tax Management feature in the Client Center.
Year-to-date (YTD) 1099 reports are made available to view or download as a PDF and XLS (Microsoft Excel) file under the Reports tab of the Gain/Loss Tax Management feature in the Client Center. Two types of YTD 1099 reports are provided: a standard 1099 summary statement, and a detailed 1099 statement.
Consolidated Form 1099s will be mailed and made available online for TradeStation Equities Accounts beginning in the last week of January. The consolidated Form 1099 may include forms 1099-B, 1099-DIV, 1099-INT, 1099-MISC, and 1099-OID dependent upon the activity within your account.
April 18, 2016.
April 25, 2016.
June 15, 2016.
September 15, 2016.
September 30, 2016.
October 17, 2016.
October 20, 2016.
January 15, 2017.
Yes. Once posted, you can access your Consolidated Form 1099 through the TradeStation Client Center:
View this video to learn how to download your TradeStation trading activity for tax preparation.
Yes. TradeStation clients may save up to $15 on the purchase of TurboTax® software. This special offer is made possible through our partnership with Intuit, Inc. Learn more.
TradeStation clients may import equities dividend, interest, and buy/sell information directly into TurboTax. If you need to report Section 1256 Contracts, such as regulated futures contracts, foreign currency contracts, or non-equity options they must be manually entered. Wash sales will be calculated after import.
View this video to learn how to import your TradeStation trading activity into TurboTax.
TradeStation clients may import equities dividend, interest, and buy/sell information directly into TurboTax. If you need to report Section 1256 Contracts, such as regulated futures contracts, foreign currency contracts, or non-equity options they must be manually entered. Wash sales will be calculated.
Within TurboTax, a position is represented by a record of the opening and closing information for that position. Typically, this comprises two trades (a buy and a sell). TurboTax limits the number of records that can be imported to approximately 2,500 within the installed/desktop version, and to approximately 500 within the online version. While importing your account information into TurboTax, if more than the maximum number of records are detected, you will receive notification and further instruction within the TurboTax interface.
If you need to edit imported data:
Section 1256 contracts claim a profit/loss based on year-end value, even though the contracts haven’t been closed. Examples of Section 1256 categorized contracts include:
If you have trading activity in your TradeStation equities account that is classified as a Section 1256 contract, it will be displayed in the Regulated Futures Contracts summary on your Consolidated Form 1099. It is important to note that if you choose to import your account data into tax preparation software, this information will not be included. To complete you tax return, you will need to enter these activities manually.
When you import your TradeStation account information into TurboTax, your Section 1256 transactions will not be included. In order to report any Section 1256 contracts you may have, simply complete the following steps within TurboTax:
If you require further assistance with reporting your Section 1256 contracts to the IRS, please contact a qualified tax advisor.
Yes. Once posted, you can download tax activity for your TradeStation equities account through the TradeStation Client Center.
About this Document
Consolidated Form 1099
This document provides a record of reportable income and transactions for the tax year. The consolidated Form 1099 may include forms 1099-B, 1099-DIV, 1099-INT, 1099-MISC, and 1099-OID depending on the account activity.
This document details all sales transactions, cover short transactions, redemptions, tender offers, and mergers for cash.
This document provides a summary of stock or mutual fund dividends received, mutual fund capital gains distributions, and any non-taxable distributions. Additionally, the document details any federal and foreign tax withheld.
This document provides a record of interest income earned if total interest earned was $10 or more. Additionally, the details any federal and foreign tax withheld.
This document reports an end-of-year summary of all non-employee compensation. Common examples include royalties, rent, self-employment income, and several other forms of miscellaneous income.
This document is used to report original issue discounts on corporate bonds, certificates of deposit (CDs), collateralized debt obligations (CDOs), and U.S. government obligations.
The national securities exchanges and the Financial Industry Regulatory Authority (FINRA) are implementing a Tick Size Pilot Program, which means some equities symbols will have trading restrictions effective October 3, 2016.
According to FINRA, the Tick Size Pilot Program will evaluate whether widening the tick size for securities of smaller capitalized companies affects trading, liquidity and market quality. The program comprises four groups of securities: a control group and three test groups. The three test groups have symbol restrictions and different trading behaviors.
If your symbol has a restriction:
The Tick Size Pilot Program commences on October 3, 2016, and is scheduled to last two years.
For the complete list of symbols and the groups to which they belong, visit the Tick Size Pilot Data Collection Securities Files on the FINRA website.
For more information, visit the Tick Size Pilot Program page on the FINRA website.
The TradeStation platform offers many advanced order-entry features, some of which could be affected by the changes implemented for the Tick Size Pilot Program.
To lessen the possibility of entering orders at unintended prices, please ensure that the preorder execution confirmation window is turned on (enabled) by right-clicking on the Order Bar, selecting Order Entry Preferences, selecting Equities and/ or Options and selecting Validations & Confirms. When placing an order, validate in the confirmation window that you are placing that order at the price you intended.
Please be aware of any symbol restrictions when making your analysis and trading decisions.
TradeStation and Intuit, Inc. are separate, unaffiliated companies and are not responsible for the products, policies, or services of one another. TurboTax® and TurboTax Online are registered trademarks and/or service marks of Intuit, Inc. TradeStation is not responsible for the reliability or suitability of the information provided therein, and does not provide tax advisory services. If you require assistance with tax lot and performance reporting, an independent and qualified tax advisory service may be able to provide you counsel.
Call a TradeStation Specialist 800.808.9336
No offer or solicitation to buy or sell securities, securities derivative or futures products of any kind, or any type of trading or investment advice, recommendation or strategy, is made, given or in any manner endorsed by any TradeStation affiliate and the information made available on this Website is not an offer or solicitation of any kind in any jurisdiction where any TradeStation affiliate is not authorized to do business, including but not limited to Japan.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Options trading is not suitable for all investors. Your account application to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. View the document titled Characteristics and Risks of Standardized Options. Before trading any asset class, customers must read the relevant risk disclosure statements on our Other Information page. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
TradeStation Group, Inc. Affiliates: All proprietary technology in TradeStation is owned by TradeStation Technologies, Inc. Equities, equities options, and commodity futures products and services are offered by TradeStation Securities, Inc. (Member NYSE, FINRA, CME and SIPC). TradeStation Securities, Inc.’s SIPC coverage is available only for equities and equities options accounts.
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