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

Trading Discussion
1

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 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.

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.

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,

2

Boring advice:

[ul]
[li]Don’t trade with money you can’t afford to lose[/li][li]Don’t borrow money to trade[/li][li]Have patience and build your account by compounding[/li][/ul]

Impatience is an account killer. Don’t fall for it.

3

I second that!:slight_smile: The magic of compounding is unbelievable! [B]“Impatience is an account killer. Don’t fall for it.” [/B] Trust me. Been there, done that!

4

Less Boring Advice:

all you have to do is pretend that you borrowed the money from your credit card, and then you don’t even have to pay the CC interest! if you are only risking 1% of your account on a trade, you will be able to withstand over 20 losses and still have 80% of your account. assuming you are actually good at trading, the thought of having 20 losses in a row seems like a ridiculous idea. even with a crappy 50% probability of success on each trade, the odds of 20 losses in a row are a million to one (thats with real math too :cool:) now if your psychology is still a bit weak, then you can get on one real hell-train of a losing streak.

and as long as you met your margin requirements for your trades, you would never even have to bring 80% of your account into existence! just purely imaginary money, but it wouldn’t matter unless you lost 20 trades in a row. just make sure the money you invest in the top 20% of your account is replaceble (perhaps painfully but still not the end of your career type thing). your confidence should lie in your [B]YEARS[/B] of trading experience, and practice with your method. and even if you only average a 50% win rate, you’ve got that million to one odds on your side :wink:

now 80% is pretty large, i’d probably limit myself to 50%, much less psychological pressure that way. the real test will be on a losing streak, if you stay cool and keep placing high reward ratio trades, you will have those million to one odds on your side. if you panic and start revenge trading, then forget trading the borrowed money.

but essentially i agree with your perspective that real business borrow money ALL THE TIME to operate successfully. but in that regard you must also trade like you are running a business, it sounds like you understand that, so that’s why i’ve said what i did :slight_smile:

edit:
and of course your goal would be to achieve the account size you want and start paying back the “borrowed” money.