Borrowing Money For Trading

Reply to a trader who just borrowed funds for trading and is now feeling overwhelmed....

Well, ok, yes you are right "you'll probably chastize me for what I'm about to say..." I've known so many traders over the years that have taken out loans, borrowed from friends, etc. etc. to get the funds they think they need to trade with full time. Not once, and I mean not ever, has it worked out for them. This does not matter whom they borrowed from or what the reason was. I don't know a single one that made it. I don't say this to be disheartening. It's just what I know from my own experience with others in your place.

Now, what would I do? Well, first I would close the loan. Then I would start to save and while saving I would study. Get a charting platform... something that is cheap. It doesn't even have to be live charts... You can use something 20 min. delayed. In this case you can often get them free. Then start studying market moves, momentum stocks if you are looking at stocks. Examine top gainer and losers on the day and study the intraday activity. Treat it as if you are going to school part-time for your advanced degree. During this time you can keep a small account if you want. Use it to try out different strategies with very small shares. You can use something like Interactive Brokers where anything 100 shares or less is only $1. You can even take a couple of daytrades a week if it's under the pattern day trader rule, but can still swingtrade.

This is what I would do and what I would tell my friends and family to do if in this situation. You have to make it so that you are NOT trading scared and trading is almost always scary to start with, but particularly so on borrowed cash.

All my best,
Toni