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Day Trading in Trinidad and Tobago

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.

» Christian Harris 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

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 14, 2024

With a small yet resource-rich economy and a GDP of approximately $28 billion, Trinidad and Tobago is primarily driven by its robust energy sector.

The Central Bank of Trinidad and Tobago oversees the financial sector, which includes a well-developed banking system, and the Trinidad and Tobago Securities and Exchange Commission (TTSEC) governs the regulatory framework of the capital markets.

Despite these regulations, the local trading environment presents challenges. These include limited access to foreign exchange and a relatively small stock market, which can significantly impact day trading activities.

Are you new to day trading in Trinidad and Tobago? This guide will get you started.

Quick Introduction

• Short-term trading in Trinidad and Tobago is regulated by the TTSEC, which governs activities such as stock trading, forex trading, and other securities. However, regulations are less comprehensive than in other regions.
• The Trinidad and Tobago Stock Exchange (TTSE) local stock market is relatively small, with a limited number of listed companies compared to extensive global exchanges. You may need to look to overseas markets to diversify your portfolios and access a broader range of assets.
• Profits from active trading online may be subject to taxes from the Board of Inland Revenue (BIR), with personal income tax rates ranging from 25% to 30%.

What Is Day Trading?

Day trading involves buying and selling financial instruments like stocks, currencies, bonds, derivatives, and commodities through online platforms within a single trading day.

Trading in Trinidad and Tobago comes with specific challenges, including limited access to foreign exchange due to periodic shortages in the local currency market, which may affect your ability to trade effectively.

It’s crucial to be well-informed and educated about the potential risks of short-term trading, such as high volatility and the complexity of the markets. This knowledge will empower you and boost your confidence before you start trading.

Is Day Trading Legal In Trinidad and Tobago?

Rest assured, day trading is legal in Trinidad and Tobago. Yet while regulated by the TTSEC, regulations are less comprehensive than those for traditional banking.

Choosing a reputable, regulated broker is crucial for day trading in Trinidad and Tobago. The Financial Intelligence Unit (FIUTT) has even warned about the dangers of unlicensed brokers and fraudulent investment schemes.

Protect yourself from forex scams by choosing a regulated broker like the UK’s FCA, Australia’s ASIC, or the EU’s CySEC, as per DayTrading.com’s Regulation & Trust Rating.

How Is Day Trading Taxed In Trinidad and Tobago?

In Trinidad and Tobago, the taxation of day trading activities normally depends on how the tax authorities classify your income.

Trinidad and Tobago does not impose a capital gains tax on profits made from the sale of stocks or other financial instruments held longer than 12 months.

If day trading is considered a business activity or your primary source of income, the profits from trading could be subject to income tax. In this case, the profits may be treated as business income and taxed at the applicable income tax rates from 25% to 30%.

When actively trading in Trinidad and Tobago, I suggest consulting with a tax professional or the Board of Inland Revenue (BIR) to ensure compliance with tax regulations and to understand how your specific trading activities will be taxed.

Christian Harris

Author

Getting Started

If you want to start day trading in Trinidad and Tobago, the process can be broken down into three key steps:

1. Choose a broker. The TTSEC oversees the financial market and publishes a list of authorized entities. Still, its regulatory framework is less stringent than that of the UK’s FCA or Australia’s ASIC, which offer a more secure trading environment with safeguards including negative balance protection and investor compensation.
2. Set up your account. Account verification usually requires a national identity card and a recent utility bill. Once approved, you can fund your trading account through wire transfers, credit cards, or, where available, the local mobile payment service Endcash.
3. Start day trading. You can trade in companies listed on the TTSE and speculate on exchange rate fluctuations involving the Trinidad and Tobago dollar (TTD). However, despite its status as a regional currency, the TTD is not widely available on most trading platforms in our experience.

A Trade In Action

Let’s consider a scenario with One Caribbean Media, a company based in Port of Spain, Trinidad and Tobago, that provides media services, technology and broadband services, wholesale distribution, and property management.

Event Background

One Caribbean Media reported earnings results for the first quarter. The company’s sales were TTD 71.13 million, compared to TTD 77.29 million a year ago.

This negative financial outcome suggested potential short-term downward momentum in One Caribbean Media’s stock price.

Trade Entry & Exit

Based on my analysis, I entered a day trade on One Caribbean Media the morning after the earnings report. The stock opened at TTD 3.55, slightly lower than the previous day’s close, which was a positive sign.

However, the price showed positive momentum, so I waited an hour or so for a pullback. I placed a sell order at TTD 3.69 with a target of TTD 3.62 (1.90% ROI), anticipating that the weak earnings report would drive the stock lower throughout the day.

My stop-loss was set just above the high-of-day price at TTD 3.76 (-1.90% ROI) to manage potential downside risk if the trade didn’t go as planned.

As the trading session progressed, One Caribbean Media’s stock began to fall steadily, supported by increasing volume and continued negative sentiment from the earnings report.

I kept a close eye on the intraday chart, watching for any signs of reversal or strengthening momentum, but the stock continued to show weakness. By mid-afternoon, it reached my target price of TTD 3.62 and locked in my gains.

The trade yielded a solid profit within a single trading day, aligning well with my strategy to capitalize on the momentum of the post-earnings.

Bottom Line

Short-term trading in Trinidad and Tobago operates in a regulated environment by the TTSEC.

Yet while you can buy and sell various financial instruments, you may face challenges like a relatively small local market and occasional foreign exchange shortages.

Profits from short-term trading are generally not subject to capital gains tax. Still, if trading is classified as your primary business activity, it may be subject to income tax, necessitating careful reporting and compliance with local tax laws.

To get started, use DayTrading.com’s selection of the best day trading platforms.

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