Stock Markets Exposed
Is it possible to get a loan for a stock trading account?
I'm new to trading. I've taken a class in options trading and am reading everything I can on trading, timing, money management etc. I want to start out with a sizeable account ~$20,000.00 so I won't get knocked out quickly while I'm getting the feel for the market. Is it possible to get a loan for these purposes? Since stock trading can be considered a business does anybody know if there is a small business-type loan for stock trading purposes. Any help would be of great help. I know I will be able to perform well in the market. But it is difficult to save a sizeable trading account when you have bills, mortgage etc. Thanks
Public Comments
- No, you can not borrow money to trade in the markets. However, if you tell the bank or any other lender that you want a home loan, then use the money for trading, they really will not know. Also once you have a fully paid account with a brokerage account, lets say $100,000 worth of stock, you can then borrow 50%, of that value, or in this case $50,000 and use that money for trading options. This is called margin trading and can be risky. The 50% that you borrow, must be paid back either with cash or by selling the stocks in your portfolo.
- I would say..Don't Do It !!! By taking a loan, you are already down the interest you will have to pay back. And if the market goes flat and you take losses, then you will being paying back a loan for nothing. Never invest on a loan. I know you don't want to hear that, but it makes no finacial sense at all. Get a second job and invest your earnings. If you have a 401 K plan at work and it matches your contributions, use that first (that's a 100% return right there) there are plenty of ways to do this without taking a loan.
- Take out a home equity line of credit. If it costs you 7% and you can make 15%, then you are ahead 8%. Just tell the bank you want to make home improvements. Then, just write checks to yourself and forward the money to your brokeage account.
- It's called buying and selling on Margin but it's quite risky.
