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Day Trading in Ukraine

Written By

Paul Holmes

Written By

Paul Holmes

Paul has over 14 years experience in the trading industry, both as a full-time trader and working with leading brokers. He’s traded indices and forex, developed proprietary day trading techniques, and built his own MetaTrader algorithms. He excels at delivering simple-to-follow guides for beginners to experienced traders.  

» Paul Holmes 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

Sep 5, 2024

Day trading has gained significant interest in Ukraine, propelled by the country’s rapidly evolving financial markets and the increasing availability of online trading platforms.

Active Ukrainian traders are seizing opportunities in local and global markets despite economic challenges and geopolitical tensions.

This guide will equip beginners with the essentials of day trading in Ukraine.

Quick Introduction

• Ukraine’s leading stock exchange is the PFTS (First Securities Trading System), but with a market capitalization of approximately $4.4B, it’s relatively small and less liquid than major markets like the NYSE and NASDAQ in the US.
• The National Securities and Stock Market Commission (NSSMC) regulates financial market trading in Ukraine, including short-term trading activities. The NSSMC is a ‘yellow tier’ body in DayTrading.com’s Regulation & Trust Rating.
• Active traders may be liable for an effective 19.5% tax rate on trading profits, formed of an 18% capital gains tax and a 1.5% military tax, payable to the State Tax Service of Ukraine.

What Is Day Trading?

Day trading is a high-risk approach to online trading that involves buying and selling financial instruments within the same day. The objective is profits from short-term market fluctuations.

Ukrainians can trade a variety of tradable assets, from PFTS-listed stocks and currency pairs like the US dollar/Ukrainian hryvnia (USD/UAH) to prominent commodities such as wheat, corn, steel and iron given the country’s significant agricultural exports and steel industry.

Cryptocurrencies like Bitcoin and Ethereum are also commonly traded over short timeframes given their high volatility and 24/7 market access.

Dealing in cryptocurrencies is permitted in Ukraine with the country developing regulations to oversee their use, notably the Law on Virtual Assets which came into effect in 2022.

I know from my own experience that real-time news and analysis are crucial for day trading. Access to high-quality data feeds is essential for making informed decisions.

Day trading in Ukraine offers opportunities but requires a solid understanding of the markets, the right tools, and a clear strategy to manage risks effectively.

Paul Holmes

Author

Is Day Trading Legal In Ukraine?

Day Trading is legal in Ukraine, regulated and subject to specific rules and requirements:

It’s essential to maintain transparent records of all trading activities and ensure that all transactions are appropriately reported to the relevant authorities.

Is Day Trading Taxed In Ukraine?

Profits from day trading may be considered capital gains and subject to taxation under Ukrainian tax law.

Here’s how the taxation of short-term trading activities works in Ukraine:

• The standard tax rate on capital gains in Ukraine is 18%. This applies to profits from selling securities, including stocks, bonds, and other financial instruments.
• In addition to the capital gains tax, a military tax of 1.5% is also levied on all income, including capital gains. Therefore, the total tax on active trading profits is effectively 19.5%.
• If you use a Ukrainian broker, taxes might be withheld automatically from your account. In this instance, the broker is responsible for reporting and paying the taxes on your behalf.
• When using an international broker, you are responsible for calculating and paying the taxes on your trading profits. You must report these profits in your annual tax return to the State Tax Service of Ukraine.
• Failure to report trading profits or pay taxes can lead to penalties, fines and legal consequences. It’s essential to keep records of trades, including purchase prices, sale prices, dates, and related expenses.

Getting Started

Getting started with day trading in Ukraine involves several steps:

1. Select a broker: If you plan on trading on Ukrainian exchanges, choose brokers registered with the National Securities and Stock Market Commission (NSSMC). Consider international brokers if you want access to global markets. Also look for fast execution speeds, low trading fees, powerful charting tools and timely support – all essential for a smooth day trading experience.
2. Set up your trading account: You will need to provide the necessary identification and financial documents to meet know your customer checks, such as a copy of your ID card (D-картка in Ukrainian). This process can take a couple of days from start to finish in on our experience.
3. Deposit Ukrainian hryvnia. Load your trading account with funds to start day trading. Payment methods differ from broker to broker but typically include debit cards and wire transfers, and sometimes popular electronic solutions in Ukraine like EasyPay and PayPal. Brokers with a UAH account help Ukrainians keep conversion costs to a minimum while facilitating a smooth day trading journey.

A Day Trade In Action

Donbasenergo is a regional power generation company operating in eastern Ukraine. The company was established in 1995 due to the restructuring of the Ukrainian power sector.

It’s the owner and manager of power stations in Slovyansk (880 MW) and Starobesheve (1,685 MW).

The major shareholder of Donbasenergo is Energoinvest Holding, which owns over 60% of the shares. The state-holding Energy Company of Ukraine owns 25% of the shares.

Donbasenergo is listed on the PFTS Ukraine Stock Exchange.

Pre Trade Analysis

I always divide my analysis into two distinct categories: fundamental and technical:

• Regarding fundamentals, many traders used sentiment metrics to flag DOEN as a strong sell. Its 52-week high was 39.9, and it had lost nearly 85% of its market capitalization over the year to fall to $142m. The P/E ratio was zero.
• Regarding technicals, the stock began a steady but relentless collapse to the downside after the bullish spike early in the trading year. The price action illustrated by the candlestick formation confirmed my negative outlook.

Overall, it’s challenging to paint a picture of recovery for the stock. Although nothing is ever guaranteed in day trading stocks, especially in a volatile market like Ukraine, I felt confident that this stock has very little chance of recovery over the short term.

The Trade

The crucial issues for me when shorting this stock involved the cost of placing the trade through a broker offering reasonable quotes and spreads and the likelihood of getting a good fill based on the volatility and lack of market liquidity that personify relatively shallow markets.

Irrespective of my confidence, I never break my rules; I always trade with a stop-loss order and prefer to cash out with a profit-limit order.

I’ll cancel the trade if I can’t get a fill close to or precisely at the quote I see on my chart. Although I am primarily a day trader, I will hold over when and if I see a benefit.

Paul Holmes

Author

My deal ticket contained the following entry and order metrics: entry at 10, stop-loss order at 12 and profit limit order at 8.

The trade proved profitable.

Bottom Line

Day trading in Ukraine is legal and regulated by the NSSMC.

Ukrainian traders can participate in local stock exchanges (e.g., Ukrainian Exchange, PFTS), but many trade in international markets via foreign brokers, providing access to the likes of the NYSE and NASDAQ.

Day trading is high-risk, and Ukrainians must stay informed about market conditions and regulatory changes. Compliance with local laws, particularly taxation and reporting, is essential.

To get moving, check out DayTrading.com’s pick of the top day trading platforms.