Borrow money to trade

[Baki202]

It’s better not to trade than to borrow money from someone else and trade with it. I would say there are two reasons why you should never borrow money for trading. First you have to pay interest, which is extra money you need to make and then give to the lender. Secondly you will be risking someone else’s money. If by any chance you lose the money, you will now have to do twice the work to earn it back.

Sometimes life is always about risk, but make sure we are taking the right step. If you are taking a loan for trading, then at the same time you should have a backup so that if anything should go wrong, you will be able to pay, because the way it is, what if you trade and things go the way you want? Then what do you think? It's a win, and I know it is normal for people to be scared of using a loan to trade, and I won't even blame them at all for what is not guaranteed. If anyone is taking that step, they should also find a way of paying back a backup should be there.

Like OP’s friend who made this mistake, I don’t want anyone else to fall into the same trap and end up with debt on their head. What you can do instead is take a small portion of your monthly income and use that to trade in the market. I know the initial profits will be low but at least you will be able to trade stress free right?

And just so you know, if you are taking a loan, how to pay it back should be at the back of your mind. Even if you are going to pay it back with your income, then taking the loan will not be a bad idea at all, because if you are taking a loan from a source, it is going to result in a very big problem, so everything is about planning.

[Swordsoffreedom]

I have a friend that is a trader like me, we talk about trading very well, but he told me something shocking today which let me think that trading is gambling for some people.

He is having business and earning almost $1000 monthly, he borrowed $1500 and he will pay $1800. He borrowed it to trade and lost everything within 3 days.

Also I noticed that he is addicted to trading but he said he is not. He told me that he will not make such a mistake again, but he wants to further learning more about trading.

I have advised him. He likes using stop loss and other things that he can use not to lose, but he still lost money anyway until he lost all the money.

When he wanted to borrow, the did not tell me, I would have advised him not to borrow the money.

How can a person with $1000 dollar account blow up their account. People amazed me when they say they are traders but don't know how to use stop loss and if they use stop loss and have all the account gone, then they don't know how to trade. A person that knows how to trade with $1000 account balance will trade and have profit and when the market is unpredictable, their loss are not that hard to handle, they can't waste the total account on stop loss.

Stop loss is just a risk management tool. It does not guarantee that you won't lose money or even blow your account if you manage your capital badly or use excessive leverage.

With a capital of $1k, if you use high leverage, such as x20 or x50, a market movement of just 2-5% against your position could cause you to lose your entire capital very quickly.

Some trader even lose millions of dollars on a single trade, so $1k is not exactly a huge amount of capital. But yes, the real issue is not whether the capital is small or large. Its how much risk you're taking relative to your capital.