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Day Trading in France

Written By

Christian Harris

Written By

Christian Harris

Christian is a seasoned journalist with decades of experience. He transitioned from tech journalism to finance to follow his interest in investing. He has been trading stocks, futures, forex, and cryptocurrencies for more than 5 years, becoming an eToro Popular Investor. With hands-on expertise across various assets, he offers valuable trading insights.

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Edited By

James Barra

Edited By

James Barra

James is an investment writer with a background in financial services. He has worked as a management consultant, where he delivered large-scale operational transformational programmes at some of Europe's biggest banks. James authors, edits and fact-checks content for a series of investing websites.

» James Barra Profile Page

Fact Checked By

Michael MacKenzie

Fact Checked 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

Updated

Jul 9, 2024

As the world’s seventh-largest economy, France boasts a Gross Domestic Product (GDP) of approximately $3.13 trillion, showcasing a robust economic landscape with attractive opportunities for active traders.

The French financial markets operate under the vigilant oversight of the Autorité des Marchés Financiers (AMF) and the Banque de France, two stringent institutions that ensure a well-regulated environment for day traders.

This guide will help you understand the essentials of day trading in France.

Quick Introduction

• Euronext Paris, France’s main stock exchange, hosts a diverse array of assets, including stocks, forex, ETFs, bonds, commodities, and indices, presenting day trading opportunities.
• France’s watchdog, the AMF, regulates domestic day trading providers. However, the EU’s cross-border initiative allows French traders to use brokers regulated in other member states.
• Under French tax law, short-term trading profits are typically classified as capital gains. The profit made from the sale of an asset after it has risen in value is subject to a flat rate of 30%.

All Day Trading Platforms in France

What Is Day Trading In France?

Day trading involves buying and selling financial instruments such as stocks, currencies, or derivatives within the same trading day to capitalize on short-term market fluctuations.

The combination of regulatory strength and sophisticated financial infrastructure makes France an attractive destination for local traders seeking fast-paced opportunities.

Day trading opportunities in France reflect its economic strength with a diverse mix of instruments: Euronext Paris-listed stocks, such as LVMH, currency pairs, such as EUR/USD, and commodities, such as steel (France is a key player in the European steel industry).

Is Day Trading Legal In France?

Day trading is legal in France and the AMF heavily regulates the market to prioritize trader protection, earning it ‘green tier’ status in our Regulation & Trust Rating. Compared to some other countries, France enforces stricter regulations to ensure a secure trading environment.

As a member of the EU, France adheres to regulations set by the European Securities and Markets Authority (ESMA). ESMA regulations address several aspects of managing risk for retail traders in France, including setting leverage limits (1:30 maximum) and making sure brokers provide negative balance protection so traders can’t owe more than their account balance.

France also implements the Markets in Financial Instruments Directive (MiFID II). This directive promotes transparency across all EU financial markets and standardizes how brokers disclose information to clients.

This combined approach by the AMF, ESMA, and MiFID II fosters a secure and informed online trading environment in France.

Christian Harris

Author

How Is Day Trading Taxed In France?

For individuals, day trading profits are typically taxed as capital gains. This means a flat rate of 30% applies, which combines 12.8% income tax and 17.2% social security contributions (Prélèvements Sociaux).

Declaring your trading profits in your annual tax return is mandatory. Additional documentation and transaction details might be required if your gains surpass certain thresholds.

Tax authorities may classify you as a professional trader if you trade frequently or rely on day trading as your primary income source. In this scenario, your trading profits are treated as business income, subject to progressive income tax rates that range from 0% to 45% depending on your total taxable income.

Getting Started

French day trading offers exciting possibilities, but a solid foundation is crucial for success. Here are the key steps to follow:

1. This begins with choosing a broker licensed by the AMF or an authorized brokerage under the EU’s passporting initiative. By opting for a licensed broker, you gain the peace of mind that your financial interests are safeguarded, allowing you to focus on developing your day trading strategies confidently.
2. With a top day trading broker in France by your side, opening a trading account is a smooth process. You must verify your identity by providing official documents like a national identity card (e.g. Carte Nationale d’Identité (CNI)) and proof of residency (e.g., utility bill). Once your application is approved, you can fund your account using convenient methods offered by your chosen broker. Depending on the broker, this might include options like wire transfers and debit cards such as French-based Carte Bancaire (CB).
3. The French markets provide a rich selection of instruments for short-term trading. Stock enthusiasts can delve into established companies like AXA and TotalEnergies, and popular forex pairs like EUR/USD and EUR/GBP offer those seeking currency-based opportunities the chance to capitalize on fluctuations in France’s official currency.

Trade In Action

Here is a scenario demonstrating a short-term trading strategy for the France-based digital automation and energy management company Schneider Electric to show you how intraday trading really works.

Event Background

Schneider Electric was set to hold its annual Capital Markets Day, an event where it announces several strategic initiatives to accelerate growth and improve operational efficiency.

The company was also expected to unveil plans to expand its digital solutions and energy management services, potentially projecting a significant increase in revenue over the next few years.

This event made Schneider Electric an attractive candidate for a day trade on the Euronext Paris.

Data Analysis

The headline announcement from the event was Schneider Electric’s ambitious transformation plan. It aims to become a leading industrial technology company, focusing on four key markets: data centers, buildings, industry, and infrastructure. Its vision is to achieve unprecedented efficiency, sustainability, and resilience in these sectors.

Given the company’s strong industrial base in energy management and automation, its plans for digital and software evolution are seen as bullish and have the potential to position the company as a key player in the industrial tech sector.

Trade Entry

I analyzed Schneider Electric’s recent stock performance before the event opened and any company news was released. The stock closed around €151.00 the previous day.

I observed a strong pre-market sentiment with numerous analyst upgrades and positive media coverage. Technically, the Relative Strength Index (RSI) was at 55, indicating room for upward movement without being overbought.

At the market open, Schneider Electric’s stock spiked over 5%, opening at €158.00. Considering the bullish sentiment from the event, I decided not to wait for a pullback and entered a buy (long) position because I believed the upward trend could be sustained for the remainder of the trading session.

Trade Exit

After a minor dip to €159.00 in the morning session, Schneider Electric’s stock continued to climb steadily – my goal to capitalize on the continued upward movement fueled by the positive company announcements paid off.

It reached €162.00 by early afternoon, driven by sustained buying pressure. I closely monitored the trading volume, which remained high, indicating strong interest and support.

Given the sharp rise in the stock price and the likelihood of other traders taking profits, I decided it was prudent to secure my gains.

I exited my position at the end of the European trading session, selling the stock at €163.40 for a 1.80% ROI.

Bottom Line

Day trading involves executing rapid trades of financial instruments, such as stocks and derivatives, within the same trading day to exploit short-term market movements. This practice requires advanced analytical tools and strategies for making swift decisions.

The AMF regulates online trading in France, ensuring a secure trading environment. As a result, day trading has become a popular activity among French traders seeking to leverage the dynamic financial markets.

The first step in embarking on your journey is to secure an account with a top-rated day trading broker in France.

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