Borrowing to trade

[SimpleTrades]

Over the last few years, I have developed a reasonable level of consistency in forex trading. However, I have been working only with mini accounts of less than $2000, pulling an average of $200/month swing trading the account. Small pickings, I know, for you big boys, but hey, I've been consistent with this result.

I'm not a rich man, however I do have a steady income outside of trading that exceeds my expenses. I am very tempted to take advantage of a balance transfer offer on my credit card to load my trading account with over $10,000. For a 1% fee, they are offering me a 0% interest balance transfer on the card for a year. The plan would be to use two other credit cards to load the trading account, and then transfer the two balances over to the interest free card.

The catch: if I don't pay it back after a year, interest jumps to close to 20%.

Yes, I know the rule: don't trade money you can't afford to lose, but .... this almost free loan is very tempting!! Worse comes to worst, and I lose it all, I can afford to pay off the loan in 18 months.

If you've learned how to be consistent in your trading, learned how to control your emotions, have a good plan, for a 1% loan for one year, is this a risk you'd take.

 

[None Business]

Yes.

Bear in mind new rules require you to make 1% repayments on the principal each month.

 

[eurusdzn]

Could you borrow 2k and now use 4k to make 400/ month, pay off your card in 5 months.
Could you then borrow 2k on your card and make 600/month and pay off debt in 14 weeks.
Repeat with an 8 k account earning 800 a month paying off debt in 10 weeks.
And so on.

 

[SimpleTrades]

Yes.

Have you done something similar before? How did this impact your trading psychology?

Could you borrow 2k and now use 4k to make 400/ month, pay off your card in 5 months.
Could you then borrow 2k on your card and make 600/month and pay off debt in 14 weeks.
Repeat with an 8 k account earning 800 a month paying off debt in 10 weeks.
And so on.

That would be preferable, I agree. However, the 0% balance transfer offer expires at the end of 2014. I have to fully exploit it in the next three weeks or forfeit. Although, I'm sure other offers will come in the future. They also have a 6 month offer if I do the balance transfer by the end of January.

 

[SimpleTrades]

Yes.

Bear in mind new rules require you to make 1% repayments on the principal each month.

I would be paying back the loan on an 18month schedule. $562/month. Assuming, I haven't lost the trading account, I'd pay off the difference at the end of the year with trading profits or remaining balance if any. Therefore, at worst, I'd be paying the 20% interest on ($10,000*1.01 - $562*12) = $3356. This is a payment that I'd be making out of employment income not trading income.

 

[loyek590]

Over the last few years, I have developed a reasonable level of consistency in forex trading. However, I have been working only with mini accounts of less than $2000, pulling an average of $200/month swing trading the account. Small pickings, I know, for you big boys, but hey, I've been consistent with this result.

I'm not a rich man, however I do have a steady income outside of trading that exceeds my expenses. I am very tempt

I would be paying back the loan on an 18month schedule. $562/month. Assuming, I haven't lost the trading account, I'd pay off the difference at the end of the year with trading profits or remaining balance if any. Therefore, at worst, I'd be paying the 20% interest on ($10,000*1.01 - $562*12) = $3356. This is a payment that I'd be making out of employment income not trading income.

yes, why would any body in their right mind not borrow money for less than they can make? You must be crazy, or scared you can't make as much as you claim you can make.

 

[SimpleTrades]

yes, why would any body in their right mind not borrow money for less than they can make? You must be crazy, or scared you can't make as much as you claim you can make.

You must be a rank beginner. If you aren't a rank beginner, then you should know better. No such thing as a sure thing in trading. How many people have thought they had the perfect profitable system only to fall into a losing streak and lose much, most or all of their money?

I've also had a run of 63 consecutive positive trades. This can't continue indefinitely. A loss is inevitable.

Controlled fear is a very positive emotion, my friend.

 

[xandman]

eurusdzn is right. You should grow your capital gradually. For $2k, I would trade $10k lots for $4k,$20k lot.
I would probably loose sleep if i doubled my position size on my futures and options accounts...well not really...

There is a big psychological factor managing increasing amounts of money. Include the financial obligations born out of your trading enterprise. That's a lot on your shoulders all at the same time.

If you are as consistent as you claim, then there is no need to rush further unless you are exploiting an anomaly that may vanish.

My best year for capital buildup was when I switched from Starbucks to Sanka.

 

[None Business]

This is an unusual card. Most credit cards promoting "0% interest" charge 3% fee to advance cash then require (only) 1%/month minimum monthly payments be made against the balance. OP's only charges a 1% fee but requires monthly payments towards the balance that are much higher it would appear.

Most American small business are started with credit cards, by the way.

I will say, while caution is warranted, fear will debilitate you if you're inclined to worry a lot. Trading in personal funds can drive you insane. It's incongruous with the rest of ours lives. I'm the kind of person who will switches cheese at the grocery store to save 40 cents. But if I lose a tick on a trade that can be $100. It's very bizarre to live in both worlds at the same time.

 

[loyek590]

You must be a rank beginner. If you aren't a rank beginner, then you should know better. No such thing as a sure thing in trading. How many people have thought they had the perfect profitable system only to fall into a losing streak and lose much, most or all of their money?

I've also had a run of 63 consecutive positive trades. This can't continue indefinitely. A loss is inevitable.

Controlled fear is a very positive emotion, my friend.

ok, thanks for setting me straight, if I ever have 63 winners in a row I'll now know to look for a loser