borrow money from credit card to trade? without hurting your trading emotion? | Forex Factory

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borrow money from credit card to trade? without hurting your trading emotion?

  • #1
  • First Post: Edited Apr 3, 2010 8:38pm Apr 1, 2010 10:57pm | Edited Apr 3, 2010 8:38pm
Hi everyone,

Note: I changed the tilte from borrow money from credit card to trade? without hurting your trading emotion? to
borrow money from credit card to trade?no. but use CC to benifit trading Please read post 27&28 for more details for shortcut.

Again I would like to thanks pipmutt & everyone for your feedback to conclude with satisfied solution.

I couldn't find any thread talking about borrowing money from credit card to trade. If professional(full time) traders can trade with profit 5-10% per month are they using credit card to trade bcos the profit well above over interest charges. And one more thing, Credit card is the most quick and easy way to get the loan without hassle.

Here is my problem:
right now my profit about 4-5% a month for few months( 3-4 yrs experiece) I'm trading now with micro lot. but I'm trying slowly to increase my lot size so won't hurt my emotion in trading.

Right now my initial capital is $6000 but my credit card allowance is $50,000 and I expect my average income $100 daily.
How can I use my credit card to earn more profit from trading say 'money management' because most of all businesses borrow money to run their businesses even banks also have to pay interest to their customers to trade(ofcos with much much lower interest). But trading is rather different due to emotion. So I need some advices from experience traders or financial advisers. All comments would be appriciated.

solution please refer the below links for solution
http://www.forexfactory.com/showpost...0&postcount=27
http://www.forexfactory.com/showpost...1&postcount=28

Best regards,
  • #2
  • Apr 2, 2010 1:11am Apr 2, 2010 1:11am
don't
Invincibility lies in the defence, the possibility of victory in the attack
  • #3
  • Apr 2, 2010 1:26am Apr 2, 2010 1:26am
Don't.

This is trading without a safety net. If you lose the account, what happens?
  • #4
  • Apr 2, 2010 1:32am Apr 2, 2010 1:32am
Quoting silverheat
don't
correct
  • #5
  • Apr 2, 2010 1:45am Apr 2, 2010 1:45am
Quoting pete.alfa
....most of all businesses borrow money to run their businesses even banks also have to pay interest to their customers to trade....
You're right, they do, but most (successful) businesses structure their financing sensibly and not by using exorbitantly expensive credit cards!

Your basic idea is sound, most businesses operate using external financing to help with cashflow ie overdrafts, but it has to structured into a business plan and a cashflow forecast, and it has to be competitive, affordable, and sustainable by the business.

Rather than using a credit card to finance your trading activities try finding a more suitable product, ie an overdraft or flexible loan, something affordable even in the worst times. If you know the payments are covered regardless then you'll not be under any pressure to perform.

Agreed, credit cards are a quick and easy way to get money...for a reason! Be smart, don't fall into the 'easy-money' credit card trap, well not unless you intend to default of course!

Alternatively why not build a track record and trade investors money, good traders are always in demand.

-
  • #6
  • Apr 2, 2010 1:50am Apr 2, 2010 1:50am
Quoting pipmutt
You're right, they do, but most (successful) businesses structure their financing sensibly and not by using exorbitantly expensive credit cards!

Your basic idea is sound, most businesses operate using external financing to help with cashflow ie overdrafts, but it has to structured into a business plan and a cashflow forecast, and it has to be competitive, affordable, and sustainable by the business.

Rather than using a credit card to finance your trading activities try finding a more suitable product, ie an overdraft or flexible loan, something...
Btw I heard "thepiratesbay" bought their servers with credit card money.
.
  • #7
  • Apr 2, 2010 1:54am Apr 2, 2010 1:54am
Quoting nasir.khan
Btw I heard "thepiratesbay" bought their servers with credit card money.
.
More fool them!

Anyway, I thought those guys were all under threat of being locked up.....
  • #8
  • Apr 2, 2010 1:59am Apr 2, 2010 1:59am
Quoting pipmutt
More fool them!

Anyway, I thought those guys were all under threat of being locked up.....
lol

i don't know if they are locked up but one of their server is in a museum.
.
  • #9
  • Apr 2, 2010 2:40am Apr 2, 2010 2:40am
Thanks everyone these were quick responses may be I have to work full time a bit longer & save more money for my initial capital

Thanks,
  • #10
  • Apr 2, 2010 3:05am Apr 2, 2010 3:05am
Quoting pete.alfa
Thanks everyone these were quick responses may be I have to work full time a bit longer & save more money for my initial capital

Thanks,
that's the right attitude, be patient

don't go into debt, it's a trap, i see it around me, all the time, people fulfilling their wishes with easy money, justifying why they need/deserve the money right now, i used to talk to people for hours why it is better to save, i calculated the hidden costs for them, i calculated that in the long run they have more & faster what they want, they wouldn't listen, because they wanted it right now, i have a principle and i know little people who think like me, and that is never go into debt unless i can pay it back right now (should i lose it), maybe that's too conservative but here i am after all this years, free, many people i know still pay their debts, what they bought is long gone, and with all the compounded interest and inflation they pay double and triple what they borrowed.
Invincibility lies in the defence, the possibility of victory in the attack
  • #11
  • Apr 2, 2010 3:44am Apr 2, 2010 3:44am
Quoting silverheat
that's the right attitude, be patient

don't go into debt, it's a trap, i see it around me, all the time, people fulfilling their wishes with easy money, justifying why they need/deserve the money right now, i used to talk to people for hours why it is better to save, i calculated the hidden costs for them, i calculated that in the long run they have more & faster what they want, they wouldn't listen, because they wanted it right now, i have a principle and i know little people who think like me, and that is never go into debt unless i can pay it...
But isn't consumer debt (ie car loans, store credit, credit cards) different to structured business financing?
  • #12
  • Apr 2, 2010 4:00am Apr 2, 2010 4:00am
Quoting pipmutt
...structured business financing
yes, but i see no structured business financing here ... in fact, he just wants to use more leverage
Invincibility lies in the defence, the possibility of victory in the attack
  • #13
  • Apr 2, 2010 4:17am Apr 2, 2010 4:17am
Quoting silverheat
yes, but i see no structured business financing here
I guess that depends on how people treat trading, either as gambling or as business. If it's business then they'll have a well thought out business plan and cashflow forecast before they even consider financing.

There's nothing wrong with borrowing to finance an appreciating asset or a viable business enterprise, in fact it makes perfect sense to me.

I guess the problem comes when they overestimate the value of the asset, the potential profitability of the business, or their abilities, and overleverage.
-
  • #14
  • Apr 2, 2010 4:37am Apr 2, 2010 4:37am
Quoting pipmutt
I guess that depends on how people treat trading, either as gambling or as business. If it's business then they'll have a well thought out business plan and cashflow forecast before they even consider financing.

There's nothing wrong with borrowing to finance an appreciating asset or a viable business enterprise, in fact it makes perfect sense to me.

I guess the problem comes when they overestimate the value of the asset, the potential profitability of the business, or their abilities, and overleverage.
-
there is the difference where my principle comes in, i buy an appreciating asset with money i saved, its a universal mindset ('i own') that did well for me personally. psychological, you are smarter with the money you saved than with the money you borrowed, just my observation.

and speaking of cashflow forecasts in speculating sounds a bit strange to me, sounds like those pension fund managers, and government forecasts.

in his case, he could choose a broker with higher leverage if he is using all of his margin already.
Invincibility lies in the defence, the possibility of victory in the attack
  • #15
  • Edited 5:01am Apr 2, 2010 4:44am | Edited 5:01am
Quoting silverheat
you are smarter with the money you saved than with the money you borrowed, just my observation.
Ha, and I look at it totally the opposite, I think it's smarter to make money using someone elses's money! Unless I misunderstood and you're saying you're less careful with non hard-earned cash, ie easy come - easy go?

You could well be right about the OP, most people seem reckless and don't have any idea about a business plan (no offence to the OP by the way!)

Quoting silverheat
and speaking of cashflow forecasts in speculating sounds a bit strange to me, sounds like those pension fund managers, and government forecasts.
Why strange? If you don't forecast then how can you exercise efficient and effective money management?

-
  • #16
  • Apr 2, 2010 5:19am Apr 2, 2010 5:19am
Quoting pete.alfa
Hi everyone,

I couldn't find any thread talking about borrowing money from credit card to trade. If professional(full time) traders can trade with profit 5-10% per month are they using credit card to trade bcos the profit well above over interest charges. And one more thing, Credit card is the most quick and easy way to get the loan without hassle.

Here is my problem:
right now my profit about 4-5% a month for few months( 3-4 yrs experiece) I'm trading now with micro lot. but I'm trying slowly to increase my lot size so won't hurt my emotion...
Why not use an increased level of leverage? Why borrow on your credit card when you can borrow from your broker (using increased leverage) instead?
  • #17
  • Apr 2, 2010 5:40am Apr 2, 2010 5:40am
Quoting pipmutt
Ha, and I look at it totally the opposite, I think it's smarter to make money using someone elses's money! Unless I misunderstood and you're saying you're less careful with non hard-earned cash, ie easy come - easy go?
i am more careful with the money i saved, because saving is work itself (it's like having a pet, keeping track, making statistics, setting goals, ...), therefore you approach money in a different way, treating money in general as a business, well you should do this with liabilities too, but yeah, easy come, easy go.

Quoting pipmutt
If you don't forecast then how can you exercise efficient and effective money management?
i admit i have no knowledge of MM at all, except from my experience. i set the cost of a trade (predetermined) in case of losing, and where to move the SL after establishment of technical levels (SR), i don't need forecasts for that, just common sense.
Invincibility lies in the defence, the possibility of victory in the attack
  • #18
  • Apr 2, 2010 6:25am Apr 2, 2010 6:25am
Quoting silverheat
i am more careful with the money i saved
Right, and that's what fast-easy-credit companies exploit, not everyone is like you and only buys wisely and only what they can afford. Just as you pointed out they buy (any old rubbish sometimes, well hey it's on credit, right) on credit and spend the next years paying off the debt while the item they brought is probably in the trash long ago....the cycle repeats, compounding the debt, until for some it eventually becomes too much to handle and they default. But like I say that's consumer debt, not business financing, two totally different animals.


Quoting silverheat
i admit i have no knowledge of MM at all, except from my experience. i set the cost of a trade (predetermined) in case of losing, and where to move the SL after establishment of technical levels (SR), i don't need forecasts for that, just common sense.
You're not alone, that's how most people see money management. A simple risk % limit per trade, potentially comparable reward, job done. That's fine, but it limits potential. Leverage is a double edged sword, in the right situation why not use it to your benefit instead of throttling it.

But that aside, whichever way you use leverage you're still forecasting cash flow. You've tested your strategy, maybe tried it on demo, and have worked out among other things it's viability and it's potential for a series of consecutive losing trades, and then taken that into account when deciding position size in order to remain solvent and continue trading should you hit a rough patch, ie a cashflow forecast!
  • #19
  • Edited 7:57am Apr 2, 2010 6:30am | Edited 7:57am
Quoting pipmutt
I guess that depends on how people treat trading, either as gambling or as business. If it's business then they'll have a well thought out business plan and cashflow forecast before they even consider financing.

There's nothing wrong with borrowing to finance an appreciating asset or a viable business enterprise, in fact it makes perfect sense to me.

I guess the problem comes when they overestimate the value of the asset, the potential profitability of the business, or their abilities, and overleverage.
-
Thank you pipmut,silverheat & guys

Now it's my business planning

I'm looking at my trading results few months ago my trading result improve dramatically due to I was working hard & understand market more.
I put my initial cash in my account $600 I'm trading with $0.4/lot and average my profit daily $3.8 so 20days trading/month my profit is average $76. so actually my profit monthly is 13% for the last few months but yearly was 4.6%/month
Then I began to think CC charges 1.75% per month so I'm better off 2.85% for 4.6%/month. Then I looked at 13% profit for the past few months. Wow 11.25% profit then I began to think of Credit card borrowing.

To make it simple I'll beginning of 2% risk management
my total loss per day is $300 so my capital should be $15,000
So I'm thinking of using my cash $6000 and borrow $9000 but not stright away.
I first borrow $1000 then my initial capital $7000
my condition to increase my capital is:-
1. borrow another $1000 when my profit is $1000& plus interest and increase $1000 borrowing each time(when profit is $1000+interest). Keep adding up until it reachs target $15,000
2. borrow extra $1000 when my profit is 2times of interest - pay off interest. Increase $1000 borrowing when my profit is 2times of interest (thinking 2-5 times of interest). Or any suggestions.
If bad month either clearing of off all the loan and start counting 1 again or paying off part of the loan on percentage of loss.

We are having a great discussion now.

And actually I think I might put in the account only 25% so $15,000 is $3750 and will increase dramatically if profit is good. Bcos I think if we loss 10 in the row or the account is losing badly then we have to stop & think how to improve trading skill & finding the fault of our trading.

Best Regards,
  • #20
  • Edited 6:51am Apr 2, 2010 6:38am | Edited 6:51am
Quoting cyberfx
Why not use an increased level of leverage? Why borrow on your credit card when you can borrow from your broker (using increased leverage) instead?
Thanks cyberfx,

I'm worry when you increase the leverage to 4-500% the broker will look at you closely. This is my worry. Experience traders can tell us

Cheers,
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