Borrow money to trade

[HyperCodexV]

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.

Borrowing to trade is like playing with fire while wearing petrol-soaked clothes. Your friend found out the hard way. One wrong move and it all goes up in smoke. When the money isn't yours, every trade feels like a life or death decision. You start second guessing yourself, breaking rules and making moves you wouldn't normally make. That's how you lose it all in three days.

The rule is simple if you can't afford to lose it, don't trade it. Borrowed money belongs in the don't even think about it pile. And the worst part  even if he wins next time, that winning streak of luck might make him think borrowing is okay. That's the trap. One win can make you forget all the losses and lead you down the same road again.

[Freeveto]

Yeah i agreed with your points. And another thing is frustration is always bound with borrowed money, rather than when you are calm using your own money to trade. The weight of a borrowed money usually weighs on someone and translate through frustration and hesitations. Because that ultimately leading to making inappropriate decisions. And almost always, trades like that hit stop loss easily, that is if the trader remembers to keep a stop loss.

When you borrow money to trade/invest, you will not have rest of mind, the risk is higher than what you can imagine seriously because you will be very cautions of losing the money while the market is not controlled by you, it’s hard to get out with profit in these kinds of investments because you will hardly have peace of mind to allow any coin you traded perform as it should be since you can’t afford to lose the money you borrowed.

The first advice always given in this forum is to invest what you can afford to lose, if we can use this always, we can’t borrow money to trade since it’s a money we cannot afford to lose.

[Asiska02]

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.

Yet again another borrowing of money to trade just because you want to make more money. Your friend has made a big mistake that even his monthly pay can’t help him out to settle within a month. If I was your friend, I would have just used even 10% of my salary without borrowing to trade with, at least that’s money I can afford to lose and not put myself in unwanted debts. The trading market is very wild and difficult to come by without having the necessary knowledge of the market.

I hope your friend learns from his mistake and not make another mistake into borrowing more money to trade. This should be a lesson to him to not rely on trading as another source of income without having the knowledge of the market to trade. The use of stop loss doesn’t come to play here if you don’t understand the market, you’ll definitely lose everything even if you use the tightest stop loss in all trades.

[Humblevirus]

[…]

Money for trading should always be borrowed when a person has full trust on his strategy, you should not borrow money purely off greed so that you are able to profit more because in search of profit you will lose your whole capital,. Most traders including me have made the mistake of not having proper goals and a plan in trading. I started trading without a goal and vision which ultimately led to me washing the whole account so borrow only when you have a proper backtested strategy not when you want to win more by investing more

No matter how experienced a trader is or what type of strategy they may have, there is no full assurance that a trader will always make a profit. That is why even so called experienced traders lose money sometimes.So, when someone is an experienced trader and it seems that they have a trusted strategy, I would still advise them not to take a loan to trade because anything can happen in the market. We saw what happened last year when a trader lost several million dollars, and it eventually led to him taking his own life. That trader was an experienced trader who had made a reasonable amount of money from trading. Even from his way of living, it showed that the trader was doing well.

So, he may have trusted his strategy, and that could be why he took such a big risk and lost that amount of money in trading, which eventually led to him taking his own life. According to what some people were saying, the money he lost might have belonged to other people. There are some traders who help people trade based on certain agreements, so that could have been another reason for the situation.What I am trying to say is that no matter how experienced a trader is, no trader can enter a trade and be 100% sure that they will come out with a profit or that they will lose. The market can go in an unexpected direction at anytime

[Pandorak]

It was a mistake from the very beginning. Taking out a loan for trading purposes often doesn’t end well. No matter how long you’ve been in the market or how profitable your strategy is, you’ll still end up losing money in the end.

All of this happens because of the wrong mindset. Trading psychology plays a crucial role, borrowing money is like clouding your judgment, you won’t be able to make the best decisions. For example, when the price reaches a specific level or area that you’ve analyzed beforehand, but because you’re afraid of losing money, you don’t enter the trade and then the price moves exactly as your analysis predicted. All of this happens because you’re using money you aren’t prepared to lose. Afterward, you might enter a trade based on FOMO, buying when the price rises and selling when it falls but you’ll still end up losing money. This is what i mean when i say it’s hard to think clearly.

[BTC FutureKing]

Yeah i agreed with your points. And another thing is frustration is always bound with borrowed money, rather than when you are calm using your own money to trade. The weight of a borrowed money usually weighs on someone and translate through frustration and hesitations. Because that ultimately leading to making inappropriate decisions. And almost always, trades like that hit stop loss easily, that is if the trader remembers to keep a stop loss.

The first advice always given in this forum is to invest what you can afford to lose, if we can use this always, we can’t borrow money to trade since it’s a money we cannot afford to lose.

This is advised because in trading most people suffer losses due to which no one is ready to adopt again after every loss. For this reason we should hold, it will not cause us any loss but we will get the result for a long time whereas in trading we get the result immediately so if you do not care about loss or profit then you are trading on the head of luck then you are wasting money for quick result and if you want the result later but with profit then hold is better. So do not go into people's talk too much by holding you will be successful at the last opportunity but in trading you have to win one thing and also lose so success in it is only when you lose 2 or 3 out of 10 trade then your success and quick result is right for you. So the form advises more hold and whoever considers it as a correct is in profit.

[JoyceBTC]

The first risk your friend took was borrowing money to trade and what made it worse is that he is an addict, which shows the he trades as if he’s gambling. Because tell me why he even went as far as borrowing funds that is more than is income and even promised to pay with an interest. Your friend was too confident and I don’t know what gave him that confidence and to make matters worst you said he’s still in his learning process.
Well I think this is enough lesson for him to learn from and adjust because this is already piling up debt for him.

[Stable090]

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.

Was he trading futures, or he was trading shitcoins? because if you trading reputable coins, and if you trading on spot alone, you not going to lose so much amount of money within a short period of time. I don’t really know how he wasted $1500 on trading within few days. Someone that has proper knowledge about trading will be able to properly manage his risk.

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.

When you tell some people about trading addiction, they going to say is not possible, they think only gamblers are the ones that get addicted. You should know that some traders are addicted to trading already, even if they are losing, they will look for possible ways to get money so that they going to continue trading. Lots of people we see trading are addicted to trading, but they don’t know they are addicted.

[Youngrebel]

He knew borrowing was a huge risk and probably a wrong move that is the reason why he didn't really want to tell you about it. Sometimes we make certain moves that we don't really tell others about because of how risky they are and how they might turn out if they don't go according to plan.

Borrowing money to trade is a bad idea because there are lots of uncertainties when it comes to trading, you cannot be too sure about anything. Your friend also lacks strategy and doesn't follow risk management, this is capable of making traders lose a lot of money within a short period of time.

If you don't have money to trade it's better you don't trade at all than borrowing money from others because you might just end up losing and getting yourself into debt.

[Harkorede]

It’s easier to be smart in retrospect, I’d say and because it didn’t work out for the said person doesn’t mean it wouldn’t have or never worked for others, I mean we’ve also seen stories where big time traders brag about how a loan was the way they venture into trading and wouldn’t have been who they are if someone didn’t trust them enough with a loan. No one becomes a pro at trading overnight, it is continuous learning and experience gathering activity, and those interested would still have to start from somewhere. There are several people who are out there currently learning trading professionally and not every one of them would have a personal capital to go independent when the time is right for them to.

However, it doesn’t excuse scenarios where significant loan sum are being taking to embark on aggressive strategies, because more often than not they’ll always end up in terrible way, the most important skill any trader could have is strict discipline, without it, then it’s just a matter of when, not if they’ll get caught up in a loop of loss chasing.

[Joy- maker]

Borrowing money to trade is a very terrible idea, which is why I would not advise anyone to try it.  As for your friend, he should better stop that habit of of borrowing money to trade.  Trading is enjoyable when you are not under pressure, and borrowing money to trade would put him under pressure which is a very bad thing.  Since he earn $1000 every month, he can use 20 percent of his income to trade or he should trade only with the amount he can afford to lose to avoid chasing after his losses.

[Josefjix]

Borrowing money to trade is a very terrible idea, which is why I would not advise anyone to try it.  As for your friend, he should better stop that habit of of borrowing money to trade.  Trading is enjoyable when you are not under pressure, and borrowing money to trade would put him under pressure which is a very bad thing.  Since he earn $1000 every month, he can use 20 percent of his income to trade or he should trade only with the amount he can afford to lose to avoid chasing after his losses.

Another habit that looks disgusting also is collecting money from people for trading crypto and then promised them rewards every month while their money is somewhere with an expert trader to give me them rewards. This setup had never ended well, it's always in premium tears. I've encountered many painful stories of this situation and it's always the traders to be in pain because so many investors calling him for their capital, profits and more.

Avoid all these habits and trade with your own funds or contact profirm for working partnership.

[Bd officer]

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.
.

$1500 loss in 3 days which surprised me. I think he was involved in futures trading? If so then I would say he lost money by gambling. I don't understand why people borrow money to trade? Do they know the risks? He lost it all on one hand and has to pay $300 in interest on the other, lol.

Ever since I heard that I shouldn't trade with more money than I can afford to lose, I haven't even thought about borrowing money. Trading is risky so I try to stay away from trading, but sometimes I can't stop myself.

[Shinpako09]

Your friend is clearly addicted to trading, and it's the bad way. To lose that much in a short period of time, he is chasing his losses and maybe with futures trading. It's not a good idea to lend him money now coz obviously it will also go down the drain. He is not trading anymore, he is gambling.

You should advise him to stop for now until he cools down and realizes all his mistakes. If he continues with his emotions right now, nothing will go right. It will become even messier instead. Trading is not for those who have short patience and can't accept that there is no 100% win rate.

[freedomgo]

If he has been trading for quite long, then he should have known already the risk of borrowing money to trade. Trading is like gambling, the outcomes are not guaranteed profitable on your part, so borrowing money will only increase the risk to lose. I suspect he is still new to trading that's why he's more greedy than discipline.

However, since you've mentioned he's already an addict in trading but is still in denial, you can't expect from him to be rational in his decision-making. When emotions motivate you as a trader, you don't care to think of the possible consequences because you are too much focused on your possible future profits which aren't guaranteed since trading itself is also risky and unpredictable.

[Lida93]

It’s easier to be smart in retrospect, I’d say and because it didn’t work out for the said person doesn’t mean it wouldn’t have or never worked for others, I mean we’ve also seen stories where big time traders brag about how a loan was the way they venture into trading and wouldn’t have been who they are if someone didn’t trust them enough with a loan. No one becomes a pro at trading overnight, it is continuous learning and experience gathering activity, and those interested would still have to start from somewhere. There are several people who are out there currently learning trading professionally and not every one of them would have a personal capital to go independent when the time is right for them to.

However, it doesn’t excuse scenarios where significant loan sum are being taking to embark on aggressive strategies, because more often than not they’ll always end up in terrible way, the most important skill any trader could have is strict discipline, without it, then it’s just a matter of when, not if they’ll get caught up in a loop of loss chasing.

You're right about how it does work successfully for some others who took this loan path which is a risk that I myself wouldn't think of taking. Trust me, I don't even want to know what could become my fate. The loss experience is what I wouldn't want to have because I don't think I can come out of it remaining the same. Let every person do what work for them, and never doing something because you heard others bragging about how it worked very profitably out for them. Trading capital can be raised in many ways but it shouldn't be from what could come with pressure to fulfill obligation.

[LastKiss]

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.
~snip~

Someone who’s addicted will probably say the same thing, they think they’re not addicted but in reality,they are. Your friend wouldn’t borrow money if he isn't addicted to trading. He would know when to stop if he didn’t have the money and won't try to force it by any means.

He can start with a wide SL if his SL keep getting hit, being addicted to trading without using an SL is more dangerous than having one or he could completely change the way he trades for example, if he trades futures he could just trade spot instead. With $1,000 in capital that should be enough to make a decent profit trading spot if he know how to trade. Keep give him advice, maybe he’ll change his mind someday.

[Sanitough]

Borrowing money is considered a reckless financial move in trading. One can borrow and experience substantial financial loss because borrowing money alone will only amplify the risk especially when the market suddenly face a downturn that could lead traders prone to losing.

This is the reason why I don't suggest taking a loan or incurring debt when trading because there are no guaranteed profitable outcome, especially knowing the fact that the market can be highly unpredictable due to the market volatility and uncertainty. But since he is currently facing addiction based on your observation, advices like this do not matter to him. He will still do things following his own concept about trading.

[Slow death]

The number of people who took out loans to engage in day trading is probably a very high and alarming number if you do any research in each country. People nowadays aren't hesitating to take out loans to gamble or day trade. Unfortunately, this is a big mistake. For two reasons:

1 - Few people make money trading; there are hundreds of articles that discuss this, for example:

97% of FUTURES TRADERS LOSE MONEY – Are You Next?

source: https://www.binance.com/en-TR/square/post/23043746801722

Less than 10% manage to do well in trading. So asking for a loan is a bad idea

2 - All loans have interest and therefore are never good. It doesn't matter if the person's project is excellent or if the person is convinced that they are an expert in trading, whether in the short or long term, they shouldn't take out a loan, because with the interest and knowing that things might not go well in trading, the person will operate under pressure and if they win, the profit won't compensate because they will have to pay back the loan with interest and as a consequence the person will constantly ask for loan extensions and will be tied to the owner of the money for a long time.

[Nothingtodo]

Trading on credit is not a bad thing if those traders are experienced enough and have enough experience to make profits in the market. In their case, if they trade on credit, they will be able to repay the borrowed money. But for those who do not have the ability to control emotions and cannot exercise self-control and do not have the ability to analyze the market sufficiently, borrowing is more risky. However, if you consider yourself perfect and have a lot of experience in trading and you can control yourself at any time in the market, then if you have all these qualities, you can trade on credit.