Borrow money to trade

[CryptoBuds]

I said "never borrow to start a new business from scratch". A new business is full of uncertainty and you are not sure yet if it will be profitable. People borrow to start a new business, but it is very risky, your chances of repaying depends on the success of the business.  The best way to borrow to support your business is by borrowing for expansion purpose. At this stage, you are more certain about the business and can still repay.

Unless I did not understand you very well, there are rich people that borrow money on business that they have not invested on before and they started it from scratch. They make their calculations and tried their luck if the calculation is positive. Another thing is that there are different kinds of loan, not all are the interest so huge like the banks interests. There have been people that make it in life through loan if the business boom. And there are people that were unable to pay back the loan if the business is not profitable.

Sorry for jumping into your conversation. I just wanted to share my thoughts on this.

I agree that borrowing money to start business or invest is risky. But I think that depend on each person's financial situation and source of income for repaying the debt.

If you can still repay the loan even if the business fail, borrowing isn't necessarily a bad decision. On the other hand, if your only plan to repay the debt is hoping that the business will turn a profit, then borrowing money is a bad idea.

Borrowing money to start a business or invest isn't recommended, but I do not think we should rule it out completely.

[Hamza2424]

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.

Bro, in one of your own topics, you said people can be gamblers in trading, or maybe I am confusing your topics with someone else's. But yep, it is true. I can be addicted to trading and can lose everything without managing my risk. If that friend of yours is earning $1k a month from his business, then he is taking a lot more risk than he was supposed to take. He should not have taken that loan in the first place. Even if he did, he should have managed the risk.

Well, if he wants to learn more, then that's not a sign that he is addicted. If he has done it for the first time and he is determined to learn so that he won't make the same mistake again, then he is on the right path. Guide him if you can, otherwise, don't give him advice that won't work for him.

He might be a better trader than you, so let him learn. Give him some resources if you have any.

[ndutndut]

~

A very strange decision, considering that this person earns only $1,000 a month, he is willing to take out a loan that will take him several months to repay. And since you say that he lost everything in just three days, I can assume that he has absolutely no risk management. I also assume that he is trading with leverage, which significantly increases his risks. I think that, to begin with, he should learn the basics of trading on the spot market. Only after becoming a reasonably experienced trader should he try trading with leverage. Although, personally I consider leveraged trading to be more like gambling.

What you said and suspected about the case being told is exactly right. Looking at the story, he must have been doing futures trading and of course this is very high risk, especially when using borrowed money. Borrowing $1500 and having to pay $1800, then losing it all in 3 days, is obviously a very bad decision plus there’s no risk management and emotions aren’t controlled.

Moreover, when he says he won’t do it again and wants to really learn this actually indicates a pattern that makes people addicted when they lose, they want to learn while playing again. What he should do is stop for a moment and evaluate his mistakes, especially regarding the money he uses for trading don’t use borrowed money. A brief piece of advice we can give is to advise him, and if he insists let him bear the risk himself. Because sometimes it’s indeed hard to advise friends they’ll realize the lesson only after they’ve lost everything.

[Supreme Donvic]

I said "never borrow to start a new business from scratch". A new business is full of uncertainty and you are not sure yet if it will be profitable. People borrow to start a new business, but it is very risky, your chances of repaying depends on the success of the business.  The best way to borrow to support your business is by borrowing for expansion purpose. At this stage, you are more certain about the business and can still repay.

Unless I did not understand you very well, there are rich people that borrow money on business that they have not invested on before and they started it from scratch. They make their calculations and tried their luck if the calculation is positive. Another thing is that there are different kinds of loan, not all are the interest so huge like the banks interests. There have been people that make it in life through loan if the business boom. And there are people that were unable to pay back the loan if the business is not profitable.

You can take loan to start up a physical business but you cannot take loan to trade cryptocurrency, we all know how volatile cryptocurrency is in nature and because of this volatile nature, you can lose your money at any time. Nothing is guaranteed when it comes to crypto trading no matter how good you are in trading, you can still lose huge amount of money.
The kind of business you should take loan for our physical business for example real estate business, car business, farming business etc. I know that people also lose money in this businesses but it is better to borrow money for this kind of business than cryptocurrency trading.

[JoyceBTC]

I said "never borrow to start a new business from scratch". A new business is full of uncertainty and you are not sure yet if it will be profitable. People borrow to start a new business, but it is very risky, your chances of repaying depends on the success of the business.  The best way to borrow to support your business is by borrowing for expansion purpose. At this stage, you are more certain about the business and can still repay.

Unless I did not understand you very well, there are rich people that borrow money on business that they have not invested on before and they started it from scratch. They make their calculations and tried their luck if the calculation is positive.

Here you said rich people, which actually means they have other sources of income and since they want to start a new business, they might not really have the money for the business at the moment, due to one or two current situations and so they decide to borrow as at that point because they are very sure of paying back. Even if they weighed their options and calculated the business will be positive, the business might still turn otherwise and fail in the future but this set of people don’t really need to worry much in paying back, because they have other source of income and are rich already. But if you know you don’t have means of paying back your loan if your business fails, it is better not to borrow.

[macson]

He is only digging his own grave. Just look, people like this, if they cannot listen to others advice that it is the wrong thing to borrow just for trading, then they will reap what they sow soon enough.

Perhaps he feels that what he is doing is trading, but from the behaviour he is showing, it actually isn't --- he is simply gambling his money in the trading market. Perhaps he does not feel that anything is strange right now, but when the money from his business gradually starts to become insufficient and starts to run out because he keeps putting it into increasingly risky trades, then he will realise that he has merely been fooled by his own mind into thinking he was trading when in fact he was gambling.

[Solokan]

Trading with borrowed money is indeed very dangerous because most people will feel uncomfortable when trading, as it certainly feels different trading with borrowed money than money they're prepared to lose. However, I also feel sorry for your friend who experienced losses while trading. Hopefully, your friend learned from his experience and finally realized that trading with borrowed money is wrong.

However, this is certainly a lesson for beginners interested in trading: don't trade with borrowed money. It's not just one or two people who have fallen victim to borrowed money; many have. Even when investing, don't use borrowed money, let alone trading.

[uchegod-21]

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.

A very strange decision, considering that this person earns only $1,000 a month, he is willing to take out a loan that will take him several months to repay. And since you say that he lost everything in just three days, I can assume that he has absolutely no risk management. I also assume that he is trading with leverage, which significantly increases his risks. I think that, to begin with, he should learn the basics of trading on the spot market. Only after becoming a reasonably experienced trader should he try trading with leverage. Although, personally I consider leveraged trading to be more like gambling.

I briefly asked myself what motivates these people to take such risks with borrowed money? Then the response I gave myself was that these people are not truly traders, they are just people who believe that trading is a means to get rich quick, that there is alot of profit to earn from trading. Whoever introduced them to trading did not explain well to them what they should be expecting. They weren't told that risks management is a very important skill to traders. It is good how bad decisions and wrong mindsets teach these kinds of traders lessons; lessons they eventually learn from to become better traders. That is if they still wish to be traders.

[Ishicryptic]

I said "never borrow to start a new business from scratch". A new business is full of uncertainty and you are not sure yet if it will be profitable. People borrow to start a new business, but it is very risky, your chances of repaying depends on the success of the business.  The best way to borrow to support your business is by borrowing for expansion purpose. At this stage, you are more certain about the business and can still repay.

Unless I did not understand you very well, there are rich people that borrow money on business that they have not invested on before and they started it from scratch. They make their calculations and tried their luck if the calculation is positive. Another thing is that there are different kinds of loan, not all are the interest so huge like the banks interests. There have been people that make it in life through loan if the business boom. And there are people that were unable to pay back the loan if the business is not profitable.

You can take loan to start up a physical business but you cannot take loan to trade cryptocurrency, we all know how volatile cryptocurrency is in nature and because of this volatile nature, you can lose your money at any time. Nothing is guaranteed when it comes to crypto trading no matter how good you are in trading, you can still lose huge amount of money.
The kind of business you should take loan for our physical business for example real estate business, car business, farming business etc. I know that people also lose money in this businesses but it is better to borrow money for this kind of business than cryptocurrency trading.

Going into a new business with your own money is not without it's risks and borrowing money to start a business is multiplying the risk so to minimize risks it is better to start with your own money and grow the business to a certain level before you can borrow to expand it when you understand your market. Same way it is not recommendable to start trading with borrowed money especially as a newbie, if you do you will be mounting undue pressure on yourself to make quick profits to repay your dept and still be in profit, since you don't control the market it is not easy to achieve your aim. So far it is possible to trade with small amounts I think that it is better to start small unless you can afford a lot of money, even if you have a lot it is still advisable to trade with small amounts that you are comfortable to lose. Trading with big funds should be for only the top pros who have a lot of experience and huge reserve funds that they can afford to lose.

[PostQuantumBTC]

Going into a new business with your own money is not without it's risks and borrowing money to start a business is multiplying the risk so to minimize risks it is better to start with your own money and grow the business to a certain level before you can borrow to expand it when you understand your market. Same way it is not recommendable to start trading with borrowed money especially as a newbie, if you do you will be mounting undue pressure on yourself to make quick profits to repay your dept and still be in profit, since you don't control the market it is not easy to achieve your aim.

I have made examples above, borrowing money to start a business is good. You people are not addressing what is actually happening in real life but you are just posting about not to borrow to do business. If you are capable of paying the money within the time specified, it is good to borrow the money if not borrowing it will keep you waiting. This is the strategy many business people are using. Many business men borrowed money to get to where they are today.

To people that do not know where we started this from, I am not talking about borrowing to trade or gamble, those two are not good. Do not borrow money to trade or gamble.

[Princess Leah]

 I find it tough to support taking loans to do thinks that profit is not guaranteed, trading on it's own is a very risk act whereby people mostly lose more than they gain so taking loans for it shouldn't be advise. Trading should be done with a spare income just like it's done with gambling and if someone doesn't have money they shouldn't risk doing it with borrowed money.

 Someone who can take loans to trade is just like an addicted gambler, people shouldn't be taking such risk cause they can tell if they'll profit or not so why risk putting themselves in debt for thngs like that.

[LastKiss]

A very strange decision, considering that this person earns only $1,000 a month, he is willing to take out a loan that will take him several months to repay. And since you say that he lost everything in just three days, I can assume that he has absolutely no risk management. I also assume that he is trading with leverage, which significantly increases his risks. I think that, to begin with, he should learn the basics of trading on the spot market. Only after becoming a reasonably experienced trader should he try trading with leverage. Although, personally I consider leveraged trading to be more like gambling.

I briefly asked myself what motivates these people to take such risks with borrowed money? Then the response I gave myself was that these people are not truly traders, they are just people who believe that trading is a means to get rich quick, that there is alot of profit to earn from trading. Whoever introduced them to trading did not explain well to them what they should be expecting. They weren't told that risks management is a very important skill to traders. It is good how bad decisions and wrong mindsets teach these kinds of traders lessons; lessons they eventually learn from to become better traders. That is if they still wish to be traders.

Maybe his capital got wiped out because he was using high leverage after getting liquidated when the price dropped or vice versa, he probably thought the drop was over and relief bounce will happen, recovering his lost will be his prioritize. With that mindset, even I might look for another money to enter the trade again but that would be very greedy and impatient if I didn't have self control.

When money is involved self control is very important, we’ve already seen lots of people will do anything when greed took control their decision. That kind of mindset led him to lose more his money in just three days and his overconfidence probably made him to borrow money.

[boyptc]

Your friend is going to have more secret borrowing than you can ever imagine. That's because you're going to be his stopper and he doesn't want you to stop him.

When someone is determined to do something like on his case to borrow and trade, no one can stop him. You're still a friend to him and he'll only realize your value when he's got nothing left but like you.

He's going to tell you his crazy decisions and you're just there on his side nodding and up to you if you're going to poke him and will say a bit of "told you but you never listened".

[EarnOnVictor]

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.

1. It's obvious that this guy is addicted to trading, but he might not realize that or refusing to admit the reality.

2. Stop loss would have helped him if he knows how to trade. However, his problem could span from inability to trade well, bad use of stop loss, among others. He now destroyed everything by introducing "borrowed money," which is a strong emotion trigger.

[Finebone]

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

He did not tell you before borrowing money because he knew you would stop him. I do not know if your friend was actually good at trading before or just an average trader who might lose more than gain. But his confidence in borrowing money for trading capital can’t be justified. Since your friend has been trading, he should know the risks of borrowing money for his trading capital. Now, how is your friend dealing with his problem?

Even though he is above average in trading, like he is already a profitable trader, it's not a wise decision to borrow money with the sole purpose of using the money to trade, that will never end well because of the additional pressure loaned money brings. When you take a loan, you are going to have a fixed date when you are going to repay back the loan, so you will want to trade every moment, even when their is no clear trading setup, just because you want to start making profit to be able to repay the loan, so you are going to lose money in the market unnecessary because you will be impatient, and once you are impatient, you cannot survive long in the market.

In addition, trading is best done with an amount you can afford to lose, so that you can control your emotions, but since the loan money is what you cannot afford to lose you will be unable to control your emotions when trading, which will make you blow your account easily.

[TheUltraElite]

Borrowing to trade is a complete no no if you ask me, but I am aware that quite a few people have been doing this and have made either a good profit or have lost and ended up in debt which they are repaying.

I understand that trading requires patience to be able to execute the correct orders and hence the constant nagging from the thought that you have borrowed money behind your back and collectors showing up your door anytime in future, will be a deterrent to mental peace which is essential to successfully trade.

Either way this person should be careful about what they are doing in future or one bad trade is all it takes to wipe out their savings.

[CryptoBuds]

Even though he is above average in trading, like he is already a profitable trader, it's not a wise decision to borrow money with the sole purpose of using the money to trade, that will never end well because of the additional pressure loaned money brings. When you take a loan, you are going to have a fixed date when you are going to repay back the loan, so you will want to trade every moment, even when their is no clear trading setup, just because you want to start making profit to be able to repay the loan, so you are going to lose money in the market unnecessary because you will be impatient, and once you are impatient, you cannot survive long in the market.

In addition, trading is best done with an amount you can afford to lose, so that you can control your emotions, but since the loan money is what you cannot afford to lose you will be unable to control your emotions when trading, which will make you blow your account easily.

Honestly, borrowing money to trade is always a bad idea, no matter how skilled or experienced we are. Because trading comes with no guarantees, and the probability of losing is always higher than the probability of making a profit.

Trading with borrowed money only adds more risk because we also have the pressure of repaying the debt.

Not borrowing money to trade will not stop us from losing, but at least we will not  have a huge debt hanging over us afterward. So, I'd avoid borrowing money to trade altogether.

[arwin100]

Borrowing to trade is a complete no no if you ask me, but I am aware that quite a few people have been doing this and have made either a good profit or have lost and ended up in debt which they are repaying.

I understand that trading requires patience to be able to execute the correct orders and hence the constant nagging from the thought that you have borrowed money behind your back and collectors showing up your door anytime in future, will be a deterrent to mental peace which is essential to successfully trade.

Either way this person should be careful about what they are doing in future or one bad trade is all it takes to wipe out their savings.

The danger about borrowing money to use for trades is that situation will create certain pressure for people doing that which could possibly destroy their decision making.

If people use the loaned money for trade, for sure that those each decision they made is on rush. Because what always come up on their mind is the repayment date that they need to take care on.

That stressful situation would eventually give them lots of tendency to commit mistake and one single bad trades could possibly put them on much worse situation. If they keep doing that cycle, they might turn their trades into more riskier than gambling.

So best to use only the money they have which also they can afford to lose. Also don't ever think about borrowing then they think about repaying once they earn money from their trades, because this is really bad decision to do.

[Big Dirams]

Borrowing to trade is a complete no no if you ask me, but I am aware that quite a few people have been doing this and have made either a good profit or have lost and ended up in debt which they are repaying.

I understand that trading requires patience to be able to execute the correct orders and hence the constant nagging from the thought that you have borrowed money behind your back and collectors showing up your door anytime in future, will be a deterrent to mental peace which is essential to successfully trade.

Either way this person should be careful about what they are doing in future or one bad trade is all it takes to wipe out their savings.

I agree with you that borrowing money to trade is a NO NO. Some people do that and lucky they survive the situation while some just end up in adding more debts to the ones they are having, which I would also say that borrowing to trade is a wrong idea.

When we borrow money and trade we will end up making hasty decisions and pushing harder to make quick profits because they need to get their debts clear and the ending days of the loan are coming so they will want to meet up so they could pay off the debts where in such rush situations they will end up making irresponsible decisions and not following their strategies in appropriate manner. The mindset will always be trigger with the situation and chase after quick profits without caution.

[Pandu Geddon]

He did not tell you before borrowing money because he knew you would stop him. I do not know if your friend was actually good at trading before or just an average trader who might lose more than gain. But his confidence in borrowing money for trading capital can’t be justified. Since your friend has been trading, he should know the risks of borrowing money for his trading capital. Now, how is your friend dealing with his problem?

Even though he is above average in trading, like he is already a profitable trader, it's not a wise decision to borrow money with the sole purpose of using the money to trade, that will never end well because of the additional pressure loaned money brings. When you take a loan, you are going to have a fixed date when you are going to repay back the loan, so you will want to trade every moment, even when their is no clear trading setup, just because you want to start making profit to be able to repay the loan, so you are going to lose money in the market unnecessary because you will be impatient, and once you are impatient, you cannot survive long in the market.

In addition, trading is best done with an amount you can afford to lose, so that you can control your emotions, but since the loan money is what you cannot afford to lose you will be unable to control your emotions when trading, which will make you blow your account easily.

It shouldn’t be a problem if, at the time of borrowing, the person borrowing already has a plan to pay back with their salary or other funds that they can definitely get. Relying on trading profits to pay off debt can be risky, because trading might not always go smoothly due to various pressures.

Trading is different from gambling. I treat the money used for trading as capital, not money that can just be easily given up if lost. It’s not about being emotional, but about being more careful when using capital for trading.