Borrow money to trade

[Oshosondy]

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.

[goldkingcoiner]

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.

I would never trade with money that was not mine. The interest piles up to the point of pain and in the end you wind up not being able to afford to pay your bills anymore.

The way I trade is with money that I can spare, after accounting for bills, food and whatever else I need for a comfortable living.

Nothing is ever fully safe. Investment is a dangerous venture one way or another, but we try to navigate the risks and probabilities to make a reasonable profit. It really is a skill, whether the market is up or down. But your friend might not even have the skills, experience or knowledge to trade in the first place, which makes exercising the entire endeaver the epitome of pointlessness.

[Donk1]

It would be good for everyone to be aware that trading constantly doesn't align with the term being consistent in trading. I don't know if folks often misalign the terms in crypto, but that word probably means analyzing the market before opening an entry. Basically if you do not see an entry then it's mostly advisable to just study the market precisely. It's easier said than done, but if you set your mind on it then gradually you will find yourself progressing.That said borrowing money is bad when it comes to trading for someone who earns that much a month. I know we can't tell how much we are going to spend a month, but still with the fact that trading is risky, if you do not have funds to trade then spend time studying with demo accounts, which would help build your experience and understanding of the market.

​Overall being addicted to trading isn't something mostly talked about because anyone who is willing to recklessly risk his or her capital for profit is probably not interested in learning, which is going to be hard for them. So i will advise spending more time with demo accounts for now so he can build his psychology of being disciplined. At the same time executing trades should only be done when he has a well thought out strategy, just to reduce the risk of random trades and losses that's all....

[Ishicryptic]

We should never borrow money to do a business that we're not sure of making profit, trading is very volatile and anybody that is borrowing to trade is taking a big risk because if he loses the fund he has to repay it back from another source or borrow more to chase loses, clearly your friend doesn't understand financial management. Aside from using your own money to trade your trading funds should be taking from your discretionary funds because there is no guarantee that you will make profit when you enter your trade, it is from discretionary funds that you will get amounts that you are comfortable to lose. Trading needs peace of mind, if you borrow money to trade you will become impatience to make profit and can make avoidable mistakes which can blow your account in seconds especially for newbies who are desperate and lack trading experience.

[snowpega]

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.

Yes, this is a big truth that if one doesn't have sufficient knowledge and information about the trading space, then it is always considered as gambling. And you surprised me haha, and all that he was also doing should also be considered as gambling. He was overconfident, I think, right? And that confidence led him to this verge where he lost all in a very short time frame. That is why it is always better to learn first before starting this journey.

One needs a lot of knowledge, as one should learn about TA (Technical analysis) and FA (Fundamental analysis) and risk management strategies that can help one to reduce risk when trades swing in their favour. Regardless of all that, we also know that this is also a fact that no one can win all the trades, so in the majority of cases there will be risk, but risk management strategies and knowledge can be helpful at such a point to keep you safe from big losses. CMIIW!

[panjul07]

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.

I'm not surprised because it is a common practice because there are many people out there who do trade like they do gamble.
They say that they are trading but they do not do deeper analysis or researches as they use their feeling only by looking at the chart quickly then predict what will happen next.
Honestly, I was in this situation, I wont deny about it but I realized that I did it wrongly after a friend advised me.

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.

If I were you, I will advise him to stop or I'll tell him that he did it wrongly so he should evaluate what he did as it is clear that he does something wrong with his trading activity.
My question, as he said that he wants to further learning, is he going to learn it himself or under supervision by someone who is more experienced?
Maybe you as a friend should help him to evaluate him and teach him how to trade better.

[Dr.Bitcoin_Strange]

Also I noticed that he is addicted to trading

Yes, he definitely is addicted to trading, evidence is that he has business according to what you said and he is earning up to $1k a month and yet he is taking loan of $1.5k to fund his trading account, it means that he has used all his previous profits made from his business to trade and has lost all the money and because he doesn't have any money yet, he can't stop himself from trading, so he went ahead to take loan.

He is a kind of trader that is probably too desperate to make profit, that's why he has lost the capital of $1500 within 3 days, he also lacks proper risk management. If for example I take loan of $1500 to trade (which I won't do), the risk management pattern I will apply is to divide the capital into 10 places, which means I will risk just $150 per trade and I will preferably take just 1 trade per day so I can target only high probability trades. If I employ this method, there's no way I can lose all that money in 3 days.

Maybe there are people who take loans to trade and they still make profits at the end and repay their debt but I see it as a very risky thing to do except the person has a guarantee means of repaying that loan when they get disappointed by trading.

[Ruttoshi]

This isn't the first time that I have heard of people borrowing money to trade or tell people to give them money to help them trade. After losing it all, it becomes a problem to pay back the debt. Some people think that trading is easy especially, when you have the mindset of getting rich through trading, you will deviate from trading to gambling.

Your friend need to stop trading if he's already addicted to prevent further losses and if he's not yet an addict, he shouldn't trade till he pays back his debt. Traders run at loss in the long run.

[mirakal]

but he wants to further learning more about trading.

Its funny that he is still in the learning process, yet he is already risking a big amount. What he borrowed is even more than his monthly income, so I would say he is being very aggressive.

I think you should advise him to start small first and keep evaluating his performance. If he starts seeing consistent progress, then he can slowly increase the amount.

Starting big when you are still learning is almost like throwing money away. In trading, you should first prove that your strategy actually works before risking more.

[PostQuantumBTC]

We should never borrow money to do a business that we're not sure of making profit,

Trading is not a business, it is sister or brother to gambling. Many people will not accept this but it is the reality.

Its funny that he is still in the learning process, yet he is already risking a big amount. What he borrowed is even more than his monthly income, so I would say he is being very aggressive.

What if he has been gambling for a long period of time but still learning? Some people will continue to learn trading until they later give up after chronic loss of money.

[Zaguru12]

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.

You have actually stated the obvious which is that your friend is gambling, there is nothing like using stop loss to help him not to lose, stop loss doesn’t stops losses. From the very first instance that someone who earns $1000 then goes out to borrow $1500 to pay back with interest you would know that this person lacks proper risk management which cannot be solved by setting of stop loss.

I will even argue that the use of stop loss is for people with proper risk management and are ready to actually manage their risk. What if your friend has used a very big position size and then applies stop loss. Will the stop loss help reduce the risk of loss in this case? I will say No. so stop loss isn’t even any problem here, rather the trader’s risk management

[nara1892]

There are several factors that could cause your friend to lose that much money in such a short time. First, the funds might have been borrowed, feeling the pressure to repay the loan quickly can lead to rushed trading decisions (which is why borrowing money to trade is strongly discouraged). Second, he may be unable to control his emotions, causing a single loss to snowball into further losses.

My advice is for him to hold off on trading with real money, as he is not yet mentally or psychologically prepared. It would be better for him to first understand the mechanics of trading and strengthen his risk management skills, using a demo account is a good alternative for practice.

[GiftedMAN]

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.

Addicted gamblers and traders will always not open up to tell you because they will look stupid to you since you will think they are using their own hands to hurt themselves but as a good friend the best you can do for him is to try and see if you can help him to get out of addiction by helping him to go further his learning in trading also help him to understand the dangers of trading with a borrowed money cause if he is not addicted he can't go all the way to borrow to trade. Once he is able to understand the importance of trading without emotions and trading with his own money then gradually he can learn to stop after losing a certain amount instead of thinking of borrowing to trade again.

[aoluain]

Indeed as others have mentioned, it sounds like the friend is a gambler!

It doesnt sound great either that he said he learned his mistake and wants to learn more
about trading before doing it again. If anyone was going to borrow money to trade they
had better be very well clued into how it all works and be proficient at trading, then again
if anyone was proficient at trading they wouldnt need to borrow because they would
be in profit anyway.

He would have been better off borrowing the money, bought Bitcoin to HODL and paid
back the loan in small manageable repayments.

[Obulis]

Borrowing to trade and not just borrowing but borrowing more than you earn monthly. Not that he can't payback but the amount is big for his earning and this might not be the first time he's borrowing to trade and this might not even be a lesson to him because he has displayed the manner of an addict. He just traded with what he can not be able to pay in four months and the question is while paying back this loan will he stop trading, the answer can be a capital no.

[bhadz]

Sorry, but your advice to him won't work anymore. He's on a mission to chase those losses he's made through those trades. Yes, it's like as a gambler who's chasing not for greatness but just to recover and he's on that spot right now with that sensation in his mind that he can make easy money through borrowing others money and then return it as if nothing has happened. That sounds easy but unreal and he'd wake up one day soon when he's tired of his incurred losses and the debts that's also accumulated interest on top of his principal loaned amount.

[Wiwo]

What business is he doing to earn $1000 monthly that is not enough for him to accumulate the $1500 he went to borrow, with interest?

For me, his actions already point out the level of addiction in him. A lot of times, people have confidence in their losses because they are never aware of the debt it has eaten them.

Trading with borrowed money is so risky that only an addict considers borrowed money as capital to trade with, most especially in the cryptocurrency market that is so volatile.

[Rruchi man]

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.

I wonder why people will make the financial mistake of still going ahead to borrow amounts to trade when they have a source of income that they could easily just take out a percentage of the profits from and invest in trading because what's the point of trying to pay interest on amounts borrowed when you have a source of income that can comfortably fund your trading even if not to a large extent but to an extent that is sufficient enough for you to profit from it if you actually know how to trade.

Also I noticed that he is addicted to trading but he said he is not.

There are many people addicted to trading even without them knowing because when people talk of addiction, they think it is only to gambling and other vices; addiction to trading is equally dangerous.

[mindrust]

Never loan any money to addicts. They come up with all kinds of excuses. Sometimes they even say they need money to cure their cancer mom. Do not believe it. There are lies, damn lies and statistics. Don't be a statistic in the big picture. Because when he consumes you, he will move to his next target in his speadsheet.

When somebody asks for money, tell them to go to a bank and come up with a counter excuse. "Sorry bruh I am paying a mortgage, zero cash flow *sad face*"

[The Cryptovator]

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.

Borrowing money for trading was the worst decision, whether it was for spot trading or future trading. A few months back someone asked me as well, and he wanted to borrow money for spot trading. I stopped him for that and explained the reality about the trading. He also lost by future trading, and then I explained that he needs to be a pro trader for that; otherwise, he will lose more. He heard me and is now trading spot only.

So ask your friend to repay the loan first, then start investing through a DCA strategy from his extra savings. Prevent him from the future trading he is doing at the beginning. Ask him to learn first spot trading, and it should be very good. Then later he will understand what he should do. Must avoid borrowing