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Bank loan for traders

  • #41
  • Dec 14, 2009 1:47am Dec 14, 2009 1:47am
I believe it would depend on your location and any experience you may have with credit.
  • #42
  • Dec 15, 2009 2:28pm Dec 15, 2009 2:28pm
Quoting fxspecialist
that would suicidal. picture this.

You have no full time job to provide income. Forex is your only income. you have to pay the bank loans say 50k and interest on top of that.

Taking worst case scenario into consideration as well, what happens when u blew all those 50k+interests?

For me.. that will be suicidal...

cheers
fxspecialist: In the situation you provided I would not recommend the person taking a loan, or trading their own capital for that matter. If a persons sole source of income is trading, and they're worried about blowing a $50k account... well I would argue that they are not being wise with risk management or money management. If the person doesn't have the capital to back the loan... again don't take a loan. The use of a loan as I described previously was for the purpose of keeping personal capital in reserve by way of leveraging OPM.

Trading loan money CAN make sense assuming the trader understands risk management and money management. If you're worried about blowing a $50k account (or any size account) then you need to revisit your trading strategy, and seek education on risk management.

- If you can't make enough gain to pay the interest on the loan AND be profitable... it's obvious... don't take a loan to trade with
- If you're worried about blowing an account... I would suggest finding something else to do because you are in the wrong mindset

In the worst case scenario, as you described. You would have lost $50k plus interest. You now repay the loan with your reserve capital and think about a different way to make money.
  • #43
  • Dec 15, 2009 7:35pm Dec 15, 2009 7:35pm
Quoting ishykiel
hmm.. I think it would be risky to take a loan to trade. I personally feel that you should only trade money that you have and can afford to lose.

Ishykiel
Pretty much sits near the top of the list for do nots in currency trading in my limited knowledge.
Pity the fool who thinks they'll make it overnight...
  • #44
  • Dec 15, 2009 9:26pm Dec 15, 2009 9:26pm
Quoting deanbo
Pretty much sits near the top of the list for do nots in currency trading in my limited knowledge.
True, but the OP doesn't want to borrow money to trade and has said so several times. He just wants to know if the bank would consider trading income reliable enough to loan him money to buy a home/boat/car.
  • #45
  • Dec 15, 2009 9:34pm Dec 15, 2009 9:34pm
Quoting billflet
True, but the OP doesn't want to borrow money to trade and has said so several times. He just wants to know if the bank would consider trading income reliable enough to loan him money to buy a home/boat/car.
Yeh, but not everyone reads that far =).

As a personal trader, good luck. But banks are bureaucrats, they need a paper trail. Get that, they'll do anything.
  • #46
  • Dec 15, 2009 11:56pm Dec 15, 2009 11:56pm
Show a solid business plan with past performance and a proforma. Outline goals and phases, etc. The more legitimate you make it look on paper, the better the outcome will be.

Your relationship with the bank also holds A LOT of weight. How long have you been there, how much money do you have in deposit, loan history with the specific bank, etc.

You might want to look into micro finance methods as well.
  • #47
  • Dec 16, 2009 2:33am Dec 16, 2009 2:33am
Quoting billflet
True, but the OP doesn't want to borrow money to trade and has said so several times. He just wants to know if the bank would consider trading income reliable enough to loan him money to buy a home/boat/car.
In the current financial climate I doubt any reputable bank will even consider forex trading as a viable income.

He will get a lone but it will be at a much higher interest rate.

Scoobs.
  • #48
  • Dec 16, 2009 6:46am Dec 16, 2009 6:46am
never ever, under any circumstances borrow money to trade.NEVER EVER, you will end up ruined or in deep sh**
Twitter: @forexpokerpro
  • #49
  • Dec 16, 2009 6:56am Dec 16, 2009 6:56am
Quoting BBPI_fxtrader
never ever, under any circumstances borrow money to trade.NEVER EVER, you will end up ruined or in deep sh**
There is nothing wrong with borrowing money to trade with (which he is not) if you know what you are doing. If things turn out bad then just go bankrupt and after a period of time start again. Countries do it all the time.

You cant be put in prison for owing money unless its the tax man.
  • #50
  • Dec 16, 2009 10:54am Dec 16, 2009 10:54am
I can't say what it is like elsewhere, but in the US if you are a self employed trader, you are considered one of two things: 1) self-employed if you can show minimum of two years of tax returns filed as your business, or 2) unemployed if you can not. This is the same for banks, credit unions and the Small Business Administration. It doesn't matter how much you are making if you can not show two years of tax returns that prove profitability. Business plans, paper trails, banking relationships, old trading statements, collateral...none of that means anything to a loaning institution without the tax returns if that (trading) is your onlys source of income.

I would recommend getting all the loans and payoffs while you still have a regular job before you quit to trade full time. Traders are looked at differently in the business comunity, fair or not.

This was the way it was five years ago; I can only see it being tougher now...
  • #51
  • Dec 16, 2009 10:56am Dec 16, 2009 10:56am
Quoting billflet
True, but the OP doesn't want to borrow money to trade and has said so several times. He just wants to know if the bank would consider trading income reliable enough to loan him money to buy a home/boat/car.
:-) how can we explain? hehe...
  • #52
  • Aug 29, 2012 3:29pm Aug 29, 2012 3:29pm
I'll resurrect this thread to say that Prosper.com and LendingClub.com avoid the banks (not sure if they are just US based, probably).

http://www.doughroller.net/p2p-lendi...nterest-rates/

I had excellent credit and just got a loan for $2k from prosper.com. It worked out to just under 20% for 3 years. I am going to put an ea on it that backtests well for 10 years and see if it beats the 6.6%.

Say I push the risk and get 50% AAR. My 2k grows into $6750. If it grows above $2400 I still profit. If you trust your EA, this is a good way to start up it seems to me. If you don't have a system or any solid backtests, don't do it.

I would check out some of the more reputable EAs at donnaforex.com with backtests behind them and good forum posts on them.
  • #53
  • Aug 29, 2012 8:35pm Aug 29, 2012 8:35pm
Quoting bingfx
Have you tried to get a bank loan?
forex trading equals impulsive income, and that might be a issue.
The bank want document of income (steady) You can show them what you earned for a period back in time, but you never know what u will earn the next period...

Its interesting if someone have done that.
Well, let us know if you know of such a bank..we'll make a beeline for it. Given the risk involved, doubt it very much. But do think hedge fund managers can try for bank loans provided they have a positive record spread over 3-5 years. It depends on the bank, their policy and so on.
  • #54
  • Aug 29, 2012 9:11pm Aug 29, 2012 9:11pm
At first glance this is a funny question. Laughable. BUT, the truth is...

If the commercial loan officer knows you - you would be amazed at what you can get a loan for even without going through all the recording fees and closing costs.

Helps if you have worked in a bank and they personally know you too in the community.

Bottom line. If they know they will get their money back no matter how your trading pans out the better your chances...
Do your time and enjoy the ride...
  • #55
  • Aug 30, 2012 1:09am Aug 30, 2012 1:09am
That's splendid ... just go bankrupt, buy a forged passport and start again. LOL. And what do you do in between starts?
Yeah you can't be put in prison but you can face a decent beating if you owe money the wrong people.
Quoting scooby-doo
There is nothing wrong with borrowing money to trade with (which he is not) if you know what you are doing. If things turn out bad then just go bankrupt and after a period of time start again. Countries do it all the time.

You cant be put in prison for owing money unless its the tax man.
forget about tomorrow, just steal away into the night
  • #56
  • Sep 4, 2012 12:30am Sep 4, 2012 12:30am
Just curious, can we write off losses in the Fx market when tax season rolls around - after all forex trading is kind of an investment, isn't it? Anyone?
  • #57
  • Sep 4, 2012 2:32pm Sep 4, 2012 2:32pm
Quoting Forexnuts
Just curious, can we write off losses in the Fx market when tax season rolls around - after all forex trading is kind of an investment, isn't it? Anyone?
Yes, in New Zealand, we can.
  • #58
  • Sep 6, 2012 1:25pm Sep 6, 2012 1:25pm
Quoting pipfarming
Yes, in New Zealand, we can.
Here's another one, is there a cap to exactly how much we can claim as losses? max that we can claim as loss?
  • #59
  • Sep 6, 2012 2:15pm Sep 6, 2012 2:15pm
Is it just me that thinks that if you are already a 'successful' trader then why do you need to get a loan for a car/boat etc?
  • #60
  • Sep 7, 2012 6:53pm Sep 7, 2012 6:53pm
Quoting TradingDrunk
Is it just me that thinks that if you are already a 'successful' trader then why do you need to get a loan for a car/boat etc?
We are all wondering about the same thing - talk about throwing down your entire pay into the wishing well..
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