Borrowing money to fund your trading account,Good/Bad - Traders Hideout | futures io social day trading
futures io futures trading


Borrowing money to fund your trading account,Good/Bad
Updated: Views / Replies:5,327 / 25
Created: by Rad4633 Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Borrowing money to fund your trading account,Good/Bad

  #1 (permalink)
Elite Member
Greensboro NC
 
Futures Experience: None
Platform: TOS/ NT Dorman
Favorite Futures: ES TF CL
 
Rad4633's Avatar
 
Posts: 1,352 since Sep 2011
Thanks: 2,651 given, 886 received

Borrowing money to fund your trading account,Good/Bad

In a recent reply in another thread, a comment was made dont borrow money to trade with. I have gave this thought many times before because I have read it over and over on futures.io (formerly BMT)

Anyone that has ever started a small business knows a start up of 100k is minimum, so if the same is applied to trading being a business, whats the difference? People mortgage their homes, max credit cards, borrow against equity, cash out IRA and so on to fund a new start up a small business.

The risk are the same, the pressure is the same, the stress is the same. 95% of small business fail 95% of all intra day traders fail. So whats the reason why everyone says dont borrow to fund your trading business? Now I need to say this most people who start a small business have experience in that area, so assume the trader has experience in trading, already past the learning stage. Ive learned to clarify on futures.io (formerly BMT) to prevent more discussion than was needed for a answer. Have I considered doing this yes,I like size figured I throw it out to see how the majority thinks.whats ur thoughts? Because honestly I dont see the difference because business is business, you make it,go bankrupt, or earn a salary.

Reply With Quote
The following 3 users say Thank You to Rad4633 for this post:
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Elite Member
In the heat
 
Futures Experience: None
Platform: NT
Favorite Futures: Energy
 
PandaWarrior's Avatar
 
Posts: 3,155 since Mar 2010
Thanks: 6,306 given, 13,250 received

Answer
This post has been selected as an answer to the original posters question Answer



Rad4633 View Post
In a recent reply in another thread, a comment was made dont borrow money to trade with. I have gave this thought many times before because I have read it over and over on futures.io (formerly BMT)

Anyone that has ever started a small business knows a start up of 100k is minimum, so if the same is applied to trading being a business, whats the difference? People mortgage their homes, max credit cards, borrow against equity, cash out IRA and so on to fund a new start up a small business.

The risk are the same, the pressure is the same, the stress is the same. 95% of small business fail 95% of all intra day traders fail. So whats the reason why everyone says dont borrow to fund your trading business? Now I need to say this most people who start a small business have experience in that area, so assume the trader has experience in trading, already past the learning stage. Ive learned to clarify on futures.io (formerly BMT) to prevent more discussion than was needed for a answer. Have I considered doing this yes,I like size figured I throw it out to see how the majority thinks.whats ur thoughts? Because honestly I dont see the difference because business is business, you make it,go bankrupt, or earn a salary.

Lots of funds are started with borrowed money. Almost all of the big ones use not only the leverage available in the market but also leverage borrowed money. Is this wise? Only time will tell but when they blow up, they blow up big.

I think borrowing money to start a trading business is fine with the caveat that all the participants know what its being borrowed for. The local bank that asks what the money is for won't respond well if you tell them the 100K is for a futures trading account. On the other hand, a wealthy relative might respond better if they know what you are doing and is comfortable with the risks.

Like all things, there is no one correct answer here. Its whats best for you and your family given your current circumstances.

I think a better option would be to qualify for a program like TopStepTrader. Same 100K but no real risk to you other than your entry fee. Plus you get professional back office support. Something to think about.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
Reply With Quote
The following 6 users say Thank You to PandaWarrior for this post:
 
  #4 (permalink)
Elite Member
Georgia, US
 
Futures Experience: None
Platform: Various
Favorite Futures: Various
 
josh's Avatar
 
Posts: 4,897 since Jan 2011
Thanks: 5,143 given, 11,242 received


Rad4633 View Post
Anyone that has ever started a small business knows a start up of 100k is minimum, so if the same is applied to trading being a business, whats the difference? People mortgage their homes, max credit cards, borrow against equity, cash out IRA and so on to fund a new start up a small business.

The risk are the same, the pressure is the same, the stress is the same. 95% of small business fail 95% of all intra day traders fail. So whats the reason why everyone says dont borrow to fund your trading business?

I would challenge your first statement; this is very dependent on the business, and certainly $100K is not a minimum for many businesses.

Running a business in debt for most adds more pressure, more stress, and can potentially lead one to make decisions that are based in fear and worry, because he is working with money he cannot afford to lose. The fact that most people do it is all the more reason to do one's best to trade with capital they own, that is not owed. Most people think nothing of running up credit cards, but then they realize they are in deep crap once they get too far behind.

Anyone who mortgages his home to start a business needs to rethink his sanity and business logic.

Reply With Quote
The following 3 users say Thank You to josh for this post:
 
  #5 (permalink)
Elite Member
Lubbock TX
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Stage 5 Trading
Favorite Futures: CL
 
MWinfrey's Avatar
 
Posts: 1,879 since Jul 2009
Thanks: 1,449 given, 3,306 received

Answer
This post has been selected as an answer to the original posters question Answer


josh View Post
Running a business in debt for most adds more pressure, more stress, and can potentially lead one to make decisions that are based in fear and worry, because he is working with money he cannot afford to lose. The fact that most people do it is all the more reason to do one's best to trade with capital they own, that is not owed. Most people think nothing of running up credit cards, but then they realize they are in deep crap once they get too far behind.

Anyone who mortgages his home to start a business needs to rethink his sanity and business logic.

I agree...I suspect most businesses that fail do so because of cash flow problems which is compounded by the amount of debt they have. I don't know this as a statistical fact but I know from personal experience of having owned a small business and seeing that issue from a number of businesses I supported.

Reply With Quote
The following 3 users say Thank You to MWinfrey for this post:
 
  #6 (permalink)
Elite Member
In the heat
 
Futures Experience: None
Platform: NT
Favorite Futures: Energy
 
PandaWarrior's Avatar
 
Posts: 3,155 since Mar 2010
Thanks: 6,306 given, 13,250 received


josh View Post

Anyone who mortgages his home to start a business needs to rethink his sanity and business logic.

Taking a risk to start a business of any kind is insane. Anyone thats every done so will tell its the most fun and the most stressful thing they've ever done. But the truth is this country was built by risk takers not afraid to lose it all in the pursuit of their dreams.

So yes, mortgaging anything to start a business is nuts, but its the way things get built in this country. Not everyone gets an angel investor. In fact, most don't.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
Reply With Quote
The following 2 users say Thank You to PandaWarrior for this post:
 
  #7 (permalink)
Elite Member
Houston,Tx
 
Futures Experience: Advanced
Platform: NinjaTrader
Broker/Data: Mirus Futures/Zen-Fire
Favorite Futures: TF
 
ThatManFromTexas's Avatar
 
Posts: 2,302 since Feb 2010
Thanks: 1,208 given, 4,293 received


Rad4633 View Post
In a recent reply in another thread, a comment was made dont borrow money to trade with. I have gave this thought many times before because I have read it over and over on futures.io (formerly BMT)

Anyone that has ever started a small business knows a start up of 100k is minimum, so if the same is applied to trading being a business, whats the difference? People mortgage their homes, max credit cards, borrow against equity, cash out IRA and so on to fund a new start up a small business.

The risk are the same, the pressure is the same, the stress is the same. 95% of small business fail 95% of all intra day traders fail. So whats the reason why everyone says dont borrow to fund your trading business? Now I need to say this most people who start a small business have experience in that area, so assume the trader has experience in trading, already past the learning stage. Ive learned to clarify on futures.io (formerly BMT) to prevent more discussion than was needed for a answer. Have I considered doing this yes,I like size figured I throw it out to see how the majority thinks.whats ur thoughts? Because honestly I dont see the difference because business is business, you make it,go bankrupt, or earn a salary.

@Rad4633

Disclaimer: This post does not represent the view point of the owners, managers, or moderators of this web site and is not intended as a slam against any moderator, board member, any banned former members whose name we dare not say, any other living person, any recently living person or any person or persons whose status we are not sure of and especially not for any platform vendor with a questionable product and a pit bull lawyer. This post is meant purely for entertainment and should not be confused with a real thought.

I am not a programmer, coach, trainer or self appointed guru and do NOT hold myself up to be a good example for anything. I do not have a book, trading room or seminar. Have a professional review any code you receive from me before you trade real money with it. There is a high risk of loss trading futures. I am not responsible for any losses incurred trading real money with any code you receive from me .Even though I have an opinion on every subject under the sun, I do not give financial advice. Nor should I be held responsible for feeble attempts at humor at your expense.


That said....

1. Your mortgage analogy doesn't hold water.... If your home is foreclosed on .... your credit is shot... but you don't owe the bank any more money . You borrow money and lose it trading... you still owe the money.

2. No one in their right mind would loan you $100,000 to start a business where ... you have no "skin in the game" .... you offer no collateral .... and you have no experience making money doing what the start up business does .

3. If you do decide to rob your 401K .... or bet the farm ... or max out your credit cards ... please let me know so I don't write you any more indicators... I don't want to be an enabler

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
Reply With Quote
The following 7 users say Thank You to ThatManFromTexas for this post:
 
  #8 (permalink)
Elite Member
Georgia, US
 
Futures Experience: None
Platform: Various
Favorite Futures: Various
 
josh's Avatar
 
Posts: 4,897 since Jan 2011
Thanks: 5,143 given, 11,242 received

Answer
This post has been selected as an answer to the original posters question Answer


PandaWarrior View Post
So yes, mortgaging anything to start a business is nuts, but its the way things get built in this country. Not everyone gets an angel investor. In fact, most don't.

Risking capital => ok, in my book
Risking place of dwelling => unnecessary

I would say that while the country was built on risk-taking, our predecessors largely did not make a habit of borrowing vast sums of money for unproven things. My grandfather, who is passed away for some time now, never thought of the idea of buying a house with borrowed money, and he saved for decades in order to provide a home for my mother. Just one example, but I think statistics over the last century would show that debt is not an intrinsic part of the US's history. The auto makers never offered a lease when they first started, it was unthinkable that someone would "rent" a car before they could afford to buy it.

The thing is, most people think they need a LOT of money to start a business. How about starting a business small, growing it, and then look to operate from a positive cash flow? It's like the trader who buys 6 monitors and 2 Intel i7's with 14TB server space and he hasn't really started trading yet? I think if a person is tempted to mortgage his house, he should consider that he needs to earn the right to get more capital. What can he do to produce the capital? There are risks, and then there is stupid.

I'm not trying to argue or offend anyone, but I've just heard and seen too many cases of businesses failing simply because they bite off more than they can chew. Start small (or start a different business first), if capital requirements are too high.

Reply With Quote
The following 4 users say Thank You to josh for this post:
 
  #9 (permalink)
Elite Member
Greensboro NC
 
Futures Experience: None
Platform: TOS/ NT Dorman
Favorite Futures: ES TF CL
 
Rad4633's Avatar
 
Posts: 1,352 since Sep 2011
Thanks: 2,651 given, 886 received


josh View Post
I would challenge your first statement; this is very dependent on the business, and certainly $100K is not a minimum for many businesses.



Running a business in debt for most adds more pressure, more stress, and can potentially lead one to make decisions that are based in fear and worry, because he is working with money he cannot afford to lose. The fact that most people do it is all the more reason to do one's best to trade with capital they own, that is not owed. Most people think nothing of running up credit cards, but then they realize they are in deep crap once they get too far behind.

Anyone who mortgages his home to start a business needs to rethink his sanity and business logic.

@josh- I enjoy us exchanging different views, Im always learning...thx for reply

Agree on 100k statement

Hummm,interesting response. Why would you say mortgaging one home for business is bad, you'll never get a cheaper rate on borrowed money. Most cases its half the rate of a normal loan. I built a custom home few yrs back paid for it upfront had built in equity, then took out a mortgage bc I want my money to make money. I see your point of view. Its all bout security.Who cares if your home is paid for and u cant afford utilities,food,etc what good will that shelter over your head do you then?

Same with business, if one is afraid to borrow against business, then A) its a bad business or B)there is security issues which would lead to decisions that would not be in the best interest for the business.

Credit Cards I love the damn things...No need to box thousands of merchant receipts every yr,CC statement has it all, I get cash back to pay what i would have to anyways so paying Invoices, I make money,Fraud protection most cases you dont get this with a debit card. And we wont even mention 0% for a year in advance, talk bout floating funds for free,yes 4% one time transaction fee but thats nothing. Key to cards is manage them to benefit you

Reply With Quote
 
  #10 (permalink)
Elite Member
Greensboro NC
 
Futures Experience: None
Platform: TOS/ NT Dorman
Favorite Futures: ES TF CL
 
Rad4633's Avatar
 
Posts: 1,352 since Sep 2011
Thanks: 2,651 given, 886 received



josh View Post
Risking capital => ok, in my book
Risking place of dwelling => unnecessary

I would say that while the country was built on risk-taking, our predecessors largely did not make a habit of borrowing vast sums of money for unproven things. My grandfather, who is passed away for some time now, never thought of the idea of buying a house with borrowed money, and he saved for decades in order to provide a home for my mother. Just one example, but I think statistics over the last century would show that debt is not an intrinsic part of the US's history. The auto makers never offered a lease when they first started, it was unthinkable that someone would "rent" a car before they could afford to buy it.

The thing is, most people think they need a LOT of money to start a business. How about starting a business small, growing it, and then look to operate from a positive cash flow? It's like the trader who buys 6 monitors and 2 Intel i7's with 14TB server space and he hasn't really started trading yet? I think if a person is tempted to mortgage his house, he should consider that he needs to earn the right to get more capital. What can he do to produce the capital? There are risks, and then there is stupid.

I'm not trying to argue or offend anyone, but I've just heard and seen too many cases of businesses failing simply because they bite off more than they can chew. Start small (or start a different business first), if capital requirements are too high.


Josh I couldn't agree with you more on everything you said, my grandfather was my mentor I thought I knew so much. With his passing when I was 27yrs old I realized I knew nothing. Thats why I believe there is no substitute for experience. We AGREE yay hand shake. Now last part depends on how fast you want to grow capital

Reply With Quote

Reply



futures io > > > Borrowing money to fund your trading account,Good/Bad

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Is paper trading good or bad? dario1 Traders Hideout 28 August 30th, 2012 07:16 PM
Strategic Day Trading Room. Great, Good or Bad? tickvix Currency Futures 2 May 5th, 2012 07:48 AM
am I a good example of bad luck Superdoug3 Reviews of Brokers and Data Feeds 9 November 2nd, 2011 10:57 AM
China Tells US 'Good Old Days' of Borrowing Have Ended Quick Summary News and Current Events 0 August 6th, 2011 03:10 PM
Good Models Gone Bad MXASJ Traders Hideout 3 October 25th, 2009 03:05 PM


All times are GMT -4. The time now is 11:44 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-12 in 0.18 seconds with 37 queries on phoenix via your IP 54.234.255.29