Do Not Trade With Borrowed Money

Do Not Trade With Borrowed Money.

Hello subscribers and readers, welcome back, it’s been a while. If you just stumbled upon this blog today, you are welcome. Should you find value in this post and wish to be notified whenever there’s a new publication, please kindly subscribe. Today’s topic is one of the frequently asked questions from people who follow my work online, people ask me this question every other day, including my mentees. That is also a biggest contributor of people seeing it fit to borrow money to trade. I cannot ignore the fact that Forex trading has been portrayed as the quickest way to make money online. Without further ado, let me get to it.

Why Do People Borrow Money?

Most people borrow money when there’s an emergency that needs to be taken care of and they have no emergency fund to finance it at that time. I know that other people do borrow money just so they can go and have some fun, but today I need to focus on borrowing for a need. A person who borrows money to trade may feel that there’s a need as they also believe that they can easily pay it back after trading for a week or so.

Disadvantages Of Trading With Borrowed Money

Trading requires you to be “sober minded”. Anything that causes stress, pressure and anxiety should be eliminated or avoided. When you trade under pressure, you are likely to be impatient and make mistakes. Let’s say you borrowed R50 000 from the bank and your loan repayment is R3000 p/m (please note that these may not be accurate figures), this will mean that every time you place a trade, you will be thinking about making that R3000 and if it happens that you are only left with one week to pay, you’ll find yourself forcing your way into the markets so you can make the loan repayment amount. I have done this a lot and I have seen other people doing it. It always leads to margin call.

What If My Start Up Capital Is Too Small?

I always advise traders not to trade on demo for too long because trading on live account is totally different from trading on demo, it requires its own practice and no one gets too attached to fake money. If you think your capital is too small, do not wait until you get more money. Start small and work on growing it. I have published a PODCAST on this topic, please do check it out for practical tips on how to grow a smaller trading account. I know from feedback that this episode has been helping a lot of traders to grow their smaller trading accounts.

I hope this helps. Thank you for stopping by. Please kindly share this post with your peers using the share buttons on the sidebar. For weekly tips on trading psychology, you can download the App on Google Playstore and never miss out on those tips. Stay safe and take care.