When and how should I pay taxes on ForEx trades?
"Legally speaking, when you convert that bit-coin onto something else, the Israeli Tax Authority will look into the value of that something else, compare it to the original value of the previous something else you used to buy bit-coins (USD, in your example), and charge you capital gain taxes for the difference. According to the Israeli law you're supposed to pay taxes when selling (converting the bit-coin to something else), and since you're not using any formal bank or stock broker which will automatically deduct the taxes, you have to pay the taxes yourself. By not doing so you're committing a tax fraud. The real question you're asking is whether they'll come after you. Well, that depends on the amounts. They might. Pay attention: there's no statute of limitation for tax fraud in Israel. They may come after you in 50 years from now. Another thing to keep in mind: if you used bit-coins to buy something (services or products of any kind), you probably didn't pay the VAT (מע""מ) - which is another case of tax fraud on your behalf. PS: I'm not a lawyer or accountant, so get a professional advice, but I have been dealing with the Tax Authority in Israel, so I've got a pretty good idea of what the rules are." I don't know how taxes work in Israel, but I imagine it is relatively similar to taxes in the US. In the US you need to pay taxes on investment earnings when you sell them or in this case trade them for something of value. The amount that would typically would be taxed on would be the difference between how much you paid for the currency and the value of the item you traded it for.  In theory there shouldn't be any difference in trading bitcoins versus dollars or euros. Reality is that they are rather weird and I don't know what category they would fall into. Are they a currency or a collectors item? I think this is all rather hypothetical because there is no way for any government to track digital currencies and any taxes paid would be based on the honor system.  I am not an account and the preceding was not tax advice... I guess Bitcoin are not that popular yet and hence there are no specific regulations. If currently it gets debated, it would be treated more like a Pre-Paid card or your Paypal account. As you have already paid taxes on the $$ you used to buy the Bitcoins there is no tax obligation as long as you keep using it to buy something else. The other way to look at it is as a commodity. If you have purchased a commodity and it has appreciated in value in future you may be liable to pay tax on the appreciated value. Think of it as a if you bought a house with the $$ and sold it later.   Once more serious trade starts happening, the governments around the world would bring in regulations. Till then there is nothing to worry about.
"Brokers need to assess your level of competency to ensure that they don't allow you to ""bite off more than you can chew"" and find yourself in a bad situation. Some brokers ask you to rate your skills, others ask you how long you've been trading, it always varies based on broker. I use IB and they gave me a questionairre about a wide range of instruments, my skill level, time spent trading, trades per year, etc.  Many brokers will use your self-reported experience to choose what types of instruments you can trade. Some will only allow you to start with stocks and restrict access to forex, options, futures, etc. until you ask for readiness and, for some brokers, even pass a test of knowledge. Options are very commonly restricted so that you can only go long on an option when you own the underlying stock when you are a ""newbie"" and scale out from there. Many brokers adopt a four-tiered approach for options where only the most skilled traders can write naked options, as seen here. It's important to note that all of this information is self-reported and you are not legally bound to answer honestly in any way. If, for example, you are well aware of the risks of writing naked options and want to try it despite never trading one before, there is nothing stopping you from saying you've traded options for 10 years and be given the privilege by your broker. Of course, they're just looking out for your best interest, but you are by no means forced into the scheme if you do not wish to be." "NASDAQ has Pre and After market : NASDAQ Trading Schedule Regular Trading Session Schedule The NASDAQ   Stock Market Trading Sessions (Eastern Time) Pre-Market Trading Hours from 4:00 a.m. to 9:30 a.m.   Market Hours from 9:30 a.m. to 4:00 p.m.   After-Market Hours from 4:00 p.m. to 8:00 p.m.   Quote and order-entry from 4:00 a.m. to 8:00 p.m.   Quotes are open and firm from 4:00 a.m. to 8:00 p.m. You can trade in Pre/After Market but liquidity is very low. If an ""unexpected world events"" occurs, the volume/liquidity will most certainly increase. Another example is the Forex Market that's open 24/7 around the world. As one major forex market closes, another one opens. According to GMT,   for instance, forex trading hours move around the world like this:   available in New York between 01:00 pm – 10:00 pm GMT; at 10:00 pm GMT   Sydney comes online; Tokyo opens at 00:00 am and closes at 9:00 am   GMT; and to complete the loop, London opens at 8:00 am and closes at   05:00 pm GMT. This enables traders and brokers worldwide, together   with the participation of the central banks from all continents, to   trade online 24 hours a day. src" Is there a limit on how much I can send? Can I send $100K plus? No. Yes. What is the most appropriate way to send money - international wire?   Is there international-wire limit restrictions I need to be aware of? Yes. No. Is there any tax obligation should I be aware of when sending money   home? If you're a US tax resident (which, as a US citizen, you are), you should be aware of gift tax rules. You'll probably want to talk to a licensed tax adviser (EA/CPA licensed in your state) and/or attorney, to understand the ramifications in full. If my family can return my money back in future, great, if not I   really don't care, but when (if) I get my money back, will I have to   pay taxes on bringing my own money back into US? No. But if you're giving it as a loan - you'll get paid interest which is taxable income to you. Is there anything else do I need to be aware of? The rules of the country which you're sending the money to. "While it's not true that you have to use leverage to participate in Forex, the alternative makes it impractical for most people to be able to do so.  You need to be able to put a lot of money into it in order to not trade on leverage. The fact is, most accounts for ""normal"" people require leverage because the size of the typical contract is more than the average person can afford to risk (or usually more than the average person has). Leverage, however, in the Forex market is not like Leverage in the stock or commodities market (well, they're the same thing in theory, but they are executed differently).  In Forex, the broker is the one lending you the money in nearly all cases, and they will cash out your position when your account balance is exhausted.  Thus, there is no risk for them (barring fraud or other illegal issues).  Technically, I don't believe they guarantee that you will not accrue a debt, but I've never heard of anyone having their position cashed out and then owed more money.  They've very good about making sure you can only spend money you've deposited. To put this another way, if you have $1,000 in your account and you are leveraged to 100,000.  Once your trade drops to $1000 in losses your position is automatically cashed out.  There is no risk to the broker, and no risk to you (other than your $1000)... So trading without leverage has little value, while traiding with leverage has lots of potential gain and no downsides (other than a faster rate of loss, but if you're worried about that, just trade smaller lots.)" Capital is an Asset. Decreasing value of capital is the decreasing value of an asset. When you buy the forex asset * DR Forex Asset * CR Cash When you sell * DR Cash  * CR Forex Asset The difference is now accounted for Here is how: Gains (and losses) are modifications to your financial position (Balance sheet). At the end of the period you take your financial performance (Profit and Loss) and put it into your balance sheet under equity. Meaning that afterwards your balance sheet is better or worse off (Because you made more money = more cash or lost it, whatever). You are wanting to make an income account to reflect the forex revaluation so at the end of the period it is reflected in profit then pushed into your balance sheet. Capital gains directly affect your balance sheet because they increase/decrease your cash and your asset in the journal entry itself (When you buy and sell it). If making money this way is actually how you make you make an income it is possible to make an account for it. If you do this you periodically revalue the asset and write off the changes to the revaluation account. You would do something like *DR Asset *CR Forex Revaluation account; depending on the method you take. Businesses mostly do this because if the capital gains are their line of business they will be taxed on it like it is income. For simplicity just account for it when you buy and sell the assets (Because you as an individual will only recognise a profit/loss when you enter and exit). Its easier to think about income and expenses are extensions of equity. Income increases your equity, expenses decrease it. This is how they relate to the accounting formula (Assets = Liabilities + Owners Equity) I can't give you a specific answer because I'm not a tax accountant, so you should seek advice from a tax professional with experience relevant to your situation. This could be a complicated situation. That being said, one place you could start is the Canada Revenue Agency's statement on investment income, which contains this paragraph: Interest, foreign interest and dividend income, foreign income,   foreign non-business income, and certain other income are all amounts   you report on your return. They are usually shown on the following   slips: T5, T3, T5013, T5013A To avoid double taxation, Canada and the US almost certainly have a foreign tax treaty that ensures you are only taxed in your country of residence. I'm assuming you're a resident of Canada. Also, this page states that: If you received foreign interest or dividend income, you have to   report it in Canadian dollars. Use the Bank of Canada exchange rate   that was in effect on the day you received the income. If you received   the income at different times during the year, use the average annual   exchange rate. You should consult a tax professional. I'm not a tax professional, let alone one who specializes in the Canadian tax system. A professional is the only one you should trust to answer your question with 100% accuracy. You normally wouldn't pay income taxes on money that isn't income. Transferring money or withdrawing it from a bank isn't an income generating event. I think it is very doubtful that you would need to claim that on income tax forms. Yes, you still need to pay income tax on your capital gain regardless of whether you converted your USD proceeds back into CAD. When you calculate your gains for tax purposes, you'll need to convert all of your gains to Canadian dollars. Generally speaking, CRA will expect you to use a historical USD to CAD exchange rate published by the Bank of Canada. At that page, notice the remark at right: Are the Exchange Rates Shown Here Accepted by Canada Revenue Agency? Yes. The Agency accepts Bank of Canada exchange rates as the basis for   calculations involving income and expenses that are denominated in   foreign currencies.