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.

[Rockson1]

Borrowing money to trade is a bad decision we all should avoid because it will hardly end well even though you are a top trader.
If you planned on repaying back the loan from the proceed of the money made from trading, just be rest assured that you will blow that your trading account very fast and easy, because you will tend to take unnecessary trading set up, just because you need money, and in trading, it's totally a bad idea to trade under pressure, which is the obvious outcome when borrows money to trade, so it's a step or a practice we should never try, because trading should only be done with what we can afford to lose. Because once we start borrowing money to trade, we are setting ourselves up to fail because we will be unable to control our emotions, since we are trading with a borrowed money, which is what we cannot afford to lose.

Is it even necessary to risk two things at the same time, trading is risky which we know, borrowing to risk for something you aren't sure of can end in someone being devastated.
I don't know if I'm going too far with my words right now but I see it as stupidity if a trader tries this, there are things people shouldn't do despite how tempted they are, even though I'm not a trader, I should be able to know when someone is not doing the right thing, I believe that there are decisions people will take that skills may not save them from, trading is not supposed to be practiced with anxiety to avoid putting oneself into shit.

[Queen uloma]

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.

Borrowing money to trade is totally wrong, because the pressure to pay back the money and the interest may make someone lose focus and struggle to settle their personal bills. It’s cool for a person to trade with only their discretionary income. Investment isn’t 100% safe but with the help of knowledge, risk management and experience, the danger will reduce.

Trading is a skill, whether market rises or falls. So if your friend doesn’t have any experience or knowledge, entering with borrowed money is an unnecessary risk on it own.

[shawonngp]

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.

Your friend's statements are true: trading is like gambling for many; for those with zero trading knowledge, it is gambling. Anyway, let's get to the real question: if your friend earns $1000 per month from his business, that is a big profit. Despite having a good income, he borrowed $1500 for trading, which means he is very greedy, and he lost everything in just 3 days. It seems he didn't trade but gambled; otherwise, his investment shouldn't have gone to zero in 3 days. Because if he invests in any coin, its price will surely not go to zero in 3 days, right? I think if he can't quit this addiction, his business will also suffer. Because if he borrows money like this and keeps losing.

[Cheema02]

First, trading with borrowed money can never be justified. Why? Because trading is an analytical activity that requires a clear, calm mind you must avoid rushing. When you use borrowed money as capital, the thought of paying it back quickly will likely constantly haunt you, and that can disrupt your peace of mind.
Second, there are two possible reasons why your friend keeps losing money on trades, either he hasn’t truly learned from his mistakes, or this is a process in which he still needs time to improve.

Well, I think it depends on a person's mental stength as to whether they can handle the pressure or not. Someone who knows that they get worried easily, and they can't handle a lot of pressure should never take loans or borrow money to do something like trading when they know trading can be risky, especially for people with a lack of patience and self-control. However, someone who is mentally strong enough to handle the pressure, and they know they won't keep thinking about the borrowed money and can focus on what they are doing, there should be no problems.

However, there is one more thing which is extremely important when it comes to borrowing money for trading, and it is the level of knowledge and experience a person has about trading. If you are mentally strong but don't have enough knowledge or experience about trading in general then you shouldn't go for it, because you should only take loans to do something if you are completely sure that you are not going to waste the money.