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Day Trading in Brazil

Written By

Michael MacKenzie

Written By

Michael MacKenzie

Michael is a writer and editor with over a decade in journalism and publishing. His niche lies in editing and fact-checking content in the financial services sector, with a focus on online brokers and trading platforms. Michael previously reported on politics and economics in the Middle East and edits books for established publishers.

» Michael MacKenzie Profile Page

Edited By

James Barra

Edited By

James Barra

James is an investment writer with a background in financial services. As a former management consultant, he has worked on major operational transformation programmes at prominent European banks. James authors, edits and fact-checks content for a series of investing websites.

» James Barra Profile Page

Fact Checked By

Jemma Grist

Fact Checked By

Jemma Grist

Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.

» Jemma Grist Profile Page

Updated

Oct 1, 2024

As the second-largest economy in the Americas with a GDP worth over $2.3 trillion, Brazil draws on a young population, rich resources and growing manufacturing and service sectors to present unique day trading opportunities.

This key BRICS (Brazil, Russia, India, China, and South Africa) state is also a global financial hub, with established financial markets, a popular currency in the Brazilian real, and one of the 25 largest stock exchanges in the world, São Paulo’s B3.

Discover the key points you need to know to make a flying start to day trading in Brazil.

Quick Introduction

• With 475 listed firms and a total market capitalization of nearly $1 trillion, Brazil’s B3 is among the world’s most influential exchanges, presenting short-term trading opportunities.
• Financial markets in Brazil are overseen by the Securities and Exchange Commission (CVM). The CVM is a ‘yellow tier’ regulator in line with DayTrading.com’s Regulation & Trust Rating.
• While profits from trading are taxed at a flat 15% rate in Brazil, day traders may be liable for a higher tax rate of 20% on their profits, payable to the Federal Revenue Service.

All Day Trading Platforms in Brazil

What Is Day Trading?

Day trading involves buying and selling an asset in a single day to profit from short-term price movements. Traders often focus heavily on technical analysis to identify, plan and execute positions.

Active Brazilian traders can choose from a wide variety of financial instruments, such as:

• Forex trading in Brazil with the real (BRL) standing as one of the world’s 20 most traded currencies and available in pairs such as USD/BRL and EUR/BRL.
• Stocks of the hundreds of companies listed on the B3 or the Bovespa Index, which tracks the most traded stocks on Brazil’s stock exchange.
• Commodities such as oil, corn, and soybeans – Brazil is among the world’s largest producers and exporters.
• ETFs that cover a wider swath of Brazilian assets and sectors, such as the iShares MSCI Brazil ETF.
• Non-traditional assets like cryptocurrencies, which are regulated as ‘virtual assets’ in Brazil.

Is Day Trading Legal In Brazil?

Yes. Traders in Brazil are free to engage in day trading as long as they comply with the rules laid out by the Brazilian Securities and Exchange Commission (CVM)

The CVM is tasked with ensuring that financial markets function safely and transparently, with participants engaging in fair trading practices.

To achieve these objectives, the CVM:

As a result, many day traders in Brazil tend to trade stocks of companies that are listed on the B3, an important and dynamic global exchange.

Is Day Trading Taxed In Brazil?

Profits from online investing activities have a straightforward flat tax rate in Brazil, which is good news for day traders.

The bad news is that, while longer-term trades face a low 15% tax rate, day trading profits may be subject to a higher 20% tax.

However, there is hope on the horizon for short-term traders thanks to a 2024 bill that aims to reduce their tax liability to the standard 15%.

Consulting an accountant or other knowledgeable professional about their tax liability is an important step for a serious day trader.

Not only will this assure you that you are meeting all of your obligations according to Brazil’s tax laws, but it might highlight steps you can take to reduce your tax burden.

Michael MacKenzie

Author

Getting Started

You can start day trading in Brazil with three simple steps:

1. Choose a top-rated day trading platform in Brazil: Weigh your requirements to find a suitable provider for your experience, budget and trading preferences. For instance, do you want to trade Brazilian equities or speculate on the BRL? Also prioritize low trading fees, reliable execution and robust charting tools – essentials for active traders. Check whether the firm is authorized by the CVM or another trusted regulator like the FCA.
2. Set up your account: You’ll need to provide proof of address and a valid form of identification such as Brazil’s Carteira de Identidade Nacional (National ID Card). You’ll also need to fund your account. In our experience, debit cards and wire transfers are usually available, and sometimes online payment solutions tailored to Brazilians like Boleto Bancário and Pix. Also choose a broker with a BRL account for a smooth day trading experience.
3. Choose a market: Once you’ve created and funded your account, the fun can begin as you research and execute short-term trades on your chosen market. Choose assets that you are knowledgeable about – in Brazil this may mean important local commodities like soybeans or domestic stocks like banking firm Nu Holdings.

A Day Trade In Action

Let’s take a closer look at Brazil’s multinational petroleum giant, Petrobras, to demonstrate how a day trade could work.

Petrobras had announced disappointing earnings for the last quarter, and I expected this to lead to losses early on Friday when trading began.

However, I believed the general outlook for Brazil’s oil sector had been positive in the preceding months as there has been progress toward a deal to end federal environmental workers’ strikes, meaning a chance that issuing of oil licenses could resume.

I also believed an announcement of a 13.57-billion-real ($2.45 billion) dividend may lure investors if the price significantly falls.

My plan is therefore to set up a trade with a buy order at R$35 – the price before a rally at the end of last week (at the time of writing) – and a take profit level at R$35.60, betting that the price would bounce back to near last week’s highs.

I needed to set this take profit order – and my stop loss at R$34.40 for a 1:1 profit/loss risk:reward ratio – after my initial buy order was triggered on Friday morning.

As it happens, my trade plays out successfully, and in fact, the price continued to rise significantly over the next trading days, greatly surpassing my take profit order.

But I am happy with the significant gains I’ve made from 60 cents per share, as my risk management strategy has helped me to lock in a decent profit while also protecting me from significant losses.

Bottom Line

Brazil offers an attractive environment for active traders with a liquid and volatile stock market, notably the B3, and substantial activities spanning agricultural commodities, notably corn and soybeans, providing short-term trading opportunities.

Still, risk management and education are essential. Never risk more reals than you are prepared to lose – day trading is a very high-risk approach to online investing.

To get started, check out DayTrading.com’s pick of the best Brazilian day trading brokers.

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