Who has ever tried to get a bank loan for trading? | Forex Factory

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Who has ever tried to get a bank loan for trading?

  • Poll

  • Have you ever asked a bank loan for trading?
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  • #1
  • First Post: Feb 8, 2015 9:49am Feb 8, 2015 9:49am
One of the most common mistakes of those who start trading is to do it with small capital (undercapitalized trader), besides not having a trading system, a good experience on the markets and an appropriate money management.

But once solved these points, there remains the problem of the small amount of capital (undercapitalization)

To solve it, an idea would be to ask for a bank loan.

Has anyone ever done that?

For those who responded "Yes" to survey, tell us your experience
  • #2
  • Feb 8, 2015 10:26am Feb 8, 2015 10:26am
2 points :

1/ You are consistently profitable in your trading : undercapitalization isn't a problem as your account will increase

2/ You aren't yet profitable : the loan will be lost

So keep away from borrowing money for trading ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #3
  • Feb 8, 2015 11:10am Feb 8, 2015 11:10am
I agree with the 2 points FeruFX has made. Actually, I am aware of advocates for starting with Deno small caputal and micro lot sizes to learn to be consistently profitable, learn money management,and all the rest o fit first. Then start live trading on a similar small scale and work up from microlots to mini and then to standard if desired. Some like to stay with smaller lot sizes to scale out more precisely among other things. I am planning to embark on all of this myself soon. This approach makes sense to me. Leverage itself (borrowing from a FX Broker) is enough borrowing for me in this business.
  • #4
  • Feb 8, 2015 11:13am Feb 8, 2015 11:13am
It goes as follows:

A profitable trader never thinks to take a loan out- for why should he?

A non profitable trader thinks to take a loan out.
  • #5
  • Feb 8, 2015 11:22am Feb 8, 2015 11:22am
You need to earn the right to trade larger. If you have proven that you are a competent trader by showing steadily increasing equity over a period of years, then borrowing money to increase your stake is not a bad idea. I wouldn't do it myself, though. But if I wanted to, I would do it on credit cards. (Forget about going to a bank.) Max out the balance on a credit card you already have, then do a balance transfer to another card that offers a 0% (or very low) interest incentive - those usually have about a year of 0% grace period. Keep paying down the balance during the low-interest grace period until the time is up, then do another transfer....credit card arbitrage. Note, these are not as easy or prevalent as they used to be - the card companies will ding you a 3-5% fee for the transfer - but those opps are still out there. Also note, if you fail, this is an excellent way to ruin your credit rating.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6
  • Feb 8, 2015 11:39am Feb 8, 2015 11:39am
as tempting as this might be, i wouldn't do it. even if you can make money o a demo account, there is no guarantee you will be able to do it for real. i'm actually learning this as we speak. demo accounts are much easier on your nerves and making the decisions with no real money in the game makes it 10 times easier then making those same decisions with real money. so instead of borrowing, i would just open an account with a broker that allows you to trade with micro lots, this way you can start to learn about the adrenalin rush and how it interferes with your profitability if you let it, while not actually risking more then a few bucks at a time. if you are able to remain profitable on that scale, then your account should grow, even if only 1% a day, it wouldn't take long to have a large enough account to start trading mini lots and so on.
  • #7
  • Feb 8, 2015 12:20pm Feb 8, 2015 12:20pm
Quoting WeeMee
even if you can make money o a demo account, .
one does not "make money" in a demo account, demo account results mean nothing
"If The Fool persists in his Folly he will become wise." - William Blake
  • #8
  • Feb 8, 2015 12:31pm Feb 8, 2015 12:31pm
Quoting lucacol
One of the most common mistakes of those who start trading is to do it with small capital (undercapitalized trader), besides not having a trading system, a good experience on the markets and an appropriate money management.
The UNDER-CAPITALIZATION that the "experts" refer to is not the size of the account balance, but the relationship between the account balance and the size of the positions. Whether one has $1,000 or $1,000,000 account balance, they will be grossly under-capitalized if they maximize their margin and put on the largest position possible. Conversely, they will be well capitalized if they will be well capitalized if they margin their account balance to only 5:1.

Build your account organically with your own trading profits is the way to go.

GREEN pips to you always.
  • #9
  • Feb 8, 2015 12:35pm Feb 8, 2015 12:35pm
Quoting lucacol
One of the most common mistakes of those who start trading is to do it with small capital (undercapitalized trader), besides not having a trading system, a good experience on the markets and an appropriate money management. But once solved these points, there remains the problem of the small amount of capital (undercapitalization) To solve it, an idea would be to ask for a bank loan. Has anyone ever done that? For those who responded "Yes" to survey, tell us your experience

Taking a loan from the bank, which they would be extremely foolish to give you, would be a fast way to ruin your life.
  • #10
  • Feb 8, 2015 12:35pm Feb 8, 2015 12:35pm
It's one of the worst things you can do
Forex is a losers game.
  • #11
  • Feb 8, 2015 12:56pm Feb 8, 2015 12:56pm
It all depends on what you know you can do. If all you've ever done is trade on demo, you know nothing, because that means nothing. If you have proven that you can reliably and consistently make money trading over a period of years (let's say steadily increasing equity for 3 years) then borrowing money to trade is in the same ballpark as borrowing money to undertake any kind of extremely risky, speculative endeavor.

Friend of mine got into real estate speculation in the late '90's. He started off buying condo's in Vancouver and Whistler and flipping them fast. Him and a couple buddies working off a handful of credit cards. They kept riding, riding high on the RE bubble - at one time he was worth 80mio (on paper) ... and then they got washed out by the RE market crash. My friend lost (almost) everything - he still has the first condo he bought and one on Whistler. Lived quite large for almost a decade....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #12
  • Edited 1:13pm Feb 8, 2015 1:00pm | Edited 1:13pm
the main problem with this "small capital" trader is their mentality invest small money but expecting High Profit 400 or maybe 1000% in 1 month.
big capital. taking loans and expect 2-10% per week should cover your loan monthly. i talking to those who trades fx more than 1 year
if your a new to fx forget it just donate your money to me
  • #13
  • Feb 8, 2015 1:13pm Feb 8, 2015 1:13pm
"Everybody has a plan until they get hit." - Mike Tyson

Inserted Video
"If The Fool persists in his Folly he will become wise." - William Blake
  • #14
  • Feb 8, 2015 1:16pm Feb 8, 2015 1:16pm
Quoting The Fool
"Everybody has a plan until they get hit." - Mike Tyson https://www.youtube.com/watch?v=4485NxfGc58
Haha, kinda reminds me discussion we had this weekend at Christophers corner. I feel like Tyson.
Quoting Tom_D_Trader
They have changed long term debt to short term roll. Is a real moneymaker, till prices plunge. Then everyone craps their pants. I mean everyone.
I believe rollers are gonna get direct punch
"I know one thing, that I know nothing." Sokrates
  • #15
  • Feb 8, 2015 1:21pm Feb 8, 2015 1:21pm
Quoting lucacol
One of the most common mistakes of those who start trading is to do it with small capital
//-----

hey lucacol..... a bigger mistake might be to start trading with large capital...... small accounts might be more of an asset that they appear .....

it would not surprise me if 75% of ff members took out loans to fund their accounts..... multiple times........ everyone that used a credit card took out a loan.....

nfa has already or is in process of banning true 'credit card' deposits in the states..... you can still use a debit card.....

i'd really be surprised if very many have actually walked into a bank and filled out an application for a loan to fund their forex account.....h
to trade and code, keep both simple... no call to impress....h
  • #16
  • Feb 8, 2015 1:28pm Feb 8, 2015 1:28pm
Asking a bank to lend you money for trading? Ha , that's a good one! Good luck trying that!
  • #17
  • Feb 8, 2015 1:46pm Feb 8, 2015 1:46pm
Quoting gravitist
Asking a bank to lend you money for trading? Ha , that's a good one! Good luck trying that!
Banks do loan money for trading and at unbelievably soft terms. In the past couple of years my loan totalled little over $500,000 obtained in 8 or 10 trenches of about $50,000 to $75,000 each. Every time I showed them the equity balance of my trading account, they gave more money for margin. No security, no collaterals, no credit check, no pledges whatever. They didn't even ask me for a promise to open a live trading account with them once I was done with those demos.
The Thief of Wall Street
  • #18
  • Feb 8, 2015 1:48pm Feb 8, 2015 1:48pm
Hayseed and Grin,

I don't know about other firms, but my broker Oanda has discontinued funding by credit card and paypal. Debit cards are still allowed.
  • #19
  • Feb 8, 2015 2:08pm Feb 8, 2015 2:08pm
Quoting hayseed
..... it would not surprise me if 75% of ff members took out loans to fund their accounts..... multiple times........ everyone that used a credit card took out a loan....
I used to live in Reno and I remember the casinos, pawn shops, and blood plasma centers all on the same street...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #20
  • Edited 2:21pm Feb 8, 2015 2:11pm | Edited 2:21pm
I think it is better for beginners to trade with larger sums, but i could see why people would disagree.

When i first started trading with live money it went a little like this.

- Load up $500
- Blow $250 (50%) Thought process, 'its only 250, reload'


OR

-Load $500
-Double it
Though process - "I doubled my account, let's trade bigger....Trippe lot size, lose that trade and now im back at $250 -$500

Repeated those mistakes many times.


First larger account size was about $15K

If i was down in even a few percent in equity, that's $500+. Thought process...Shit im down $500....I need to take this more seriously!!!


Conclusion:

Smaller accounts promote risky trading and come more excuses to blow and keep reloading your money.
Larger accounts tend to promote more conservative and safer trading, or SUSTAINABLE, long term trading.
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