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Day Trading in Ireland

Written By

Royston Wild

Written By

Royston Wild

Royston is an experienced investor and writer. His expertise includes stock recommendations through to commodities, forex, and macroeconomic news. Royston's background includes roles as a stocks and commodities reporter, and editor of forex coverage at Shares Magazine.

» Royston Wild 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.

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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

Aug 15, 2024

Like many Western European countries, Ireland is home to a thriving community of day traders. A stable economy, decent technological infrastructure, and investor safeguards provided by the Central Bank of Ireland (CBI) all make online trading an attractive pursuit.

This guide explains how you can get started with day trading in Ireland and provides key details on tax rules and trader protections. It also shows what a short-term trade might look like, focusing on a stock listed on the Euronext Dublin.

Quick Introduction

• Day trading in Ireland is supervised by the Central Bank of Ireland (CBI), a ‘green-tier’ regulator which means retail investors enjoy a solid level of protection.
• Irish equities are traded on the Euronext Dublin, through which traders can swap shares (and other financial instruments) between 08:00 and 16:30 Greenwich Mean Time (GMT).
• Alongside popular short-term trading products like CFDs, Ireland permits spread betting where profits are exempt from Capital Gains Tax, Income Tax, or Stamp Duty.

All Day Trading Platforms in Ireland

What Is Day Trading?

Day traders in Ireland can deal across a wide spectrum of asset classes, including shares, commodities, cryptocurrencies, and derivatives (such as futures, options, and contracts for difference (CFDs)).

Forex trading in Ireland is also a huge market, despite the country not having its own currency and using the Euro.

Company shares are traded on Euronext Dublin, the current name for the Irish Stock Exchange following its takeover in 2018. The venue also hosts trading for other financial instruments like corporate and government bonds, funds, and exchange-traded funds (ETFs).

Euronext Dublin’s ISEQ 20 index lists the country’s largest listed companies by market capitalisation and is used to gauge the broader health of Ireland’s stock market.

Prominent names include budget airline Ryanair, food manufacturer Kerry Group, and financial services provider Bank of Ireland.

Royston Wild

Author

Is Day Trading Legal In Ireland? 

Yes. Financial markets are closely supervised by the Central Bank of Ireland (CBI), which seeks to ensure that they operate in an orderly, transparent, and fair manner.

More broadly, the CBI is responsible for (in its own words) “maintaining monetary and financial stability while ensuring that the financial system operates in the best interests of consumers and the wider economy.”

One way it seeks to do this is by providing a list of approved financial services companies that can be found on the organisation’s website, along with a list of warnings about unauthorised firms, helping traders avoid fraudulent actors.

Ireland’s membership of the European Union (EU) means financial market regulations are also set by the European Securities and Markets Association (ESMA). One key piece of legislation the CBI must enforce is the Markets in Financial Instruments Directive II (MiFID II), which was introduced by ESMA in 2018.

MiFID II set out to improve customer protections and market integrity in a variety of ways. This includes demanding a high level of transparency from financial services firms, demanding clear and comprehensive product information for traders (including on costs), establishing limits on leverage, and requiring systems for companies to identify and manage conflicts of interest.

How Is Day Trading Taxed In Ireland? 

Day traders are required to pay tax on any profits they make to the country’s Revenue Commissioners. Ireland’s tax year runs from 1 January to 31 December, and traders must submit their tax returns by 31 October the following year.

Investors are liable to pay income tax on their profits if trading is their chief occupation. Income tax rates range between 20% to 40%, and the exact amount someone will owe depends on their marital status and if they have dependents.

Traders will usually also need to pay the Universal Social Charge (USC) at a rate of between 0.5% and 8% if their total income exceeds €13,000. Those who earn above €5,000 per annum will make contributions for Pay Related Social Insurance (PRSI), too – this is charged at a flat rate of 4%, with a minimum payment of €500 required.

How To Start Day Trading

A few simple steps are required for individuals in Ireland to begin trading financial markets:

1. Choose a top trading platform in Ireland. Once you’ve confirmed that the company you’re considering is approved to do business in Ireland, think about other factors like the functionality and ease-of-use of their trading platform; the range of assets they allow you to deal in; the fees they charge; and, if you plan to use borrowed funds, the levels of leverage on offer.
2. Open an account. This may only take a few minutes, but will require you to provide proof of identification and proof of address. Irish traders may be able to use an EU identity card to complete this step. The broker may also ask you questions on issues like your risk tolerance, investment goals, and previous trading experience.
3. Make a deposit. The final step is to send some funds to your account. This can be done through a wire transfer or with a debit card, for example, with the money showing almost instantly in your trading kitty.

A Trade In Action

With these actions ticked off you’ll be ready to start dealing in the financial markets. But what might a short-term trade look like? Here’s a hypothetical example of a stock trade on the Euronext Dublin.

The Background

My plan is to trade Cairn Homes shares around the time of the European Central Bank (ECB)’s next interest rate announcement. I believe the central bank – which sets monetary policy for EU members like Ireland – will raise its benchmark, unlike the rest of the market which has priced in a rate freeze.

In this scenario, Cairn Homes shares could fall in value, reflecting investor fears that homebuyer affordability will be damaged by higher interest rates.

Accordingly, I take out a short position on the housebuilder. This involves me selling shares that I borrow from my broker, and buying them back at a cheaper price after (hopefully) the stock has fallen in value. I then pocket the difference as profit.

Before I place the trade, however, I carry out some technical analysis to improve my understanding of possible price changes, including the size of any market movements.

The Trade

I sit down at my trading terminal at 13:10 GMT, five minutes before the ECB is due to publish its rate decision.

At this time, Cairn Homes is trading at 1.874 euros per share. So I punch two orders in the system: a ‘take profit’ at 1.854 euros per share, and a ‘stop loss’ at 1.921 euros per share.

This strategy helps me to manage risk by automatically closing my position if the housebuilder’s shares either rise or fall to those levels. In other words, it will lock in any profits before the stock has a chance to fall again, or it will limit any losses I make.

A few minutes later the ECB announces that it has raised rates as I’d predicted. Cairn Homes subsequently falls to my ‘take profit’ level of 1.854 euros per share, my position is exited, and I’ve booked a 20-point profit from my trade.

Bottom Line 

Ireland is an attractive place for day traders to do business, thanks in large part to tight regulations by the CBI. That said, as with any territory, scammers still exist and investors need to take steps to avoid them.

To this end, get started with a top-rated day trading broker in Ireland.

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