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Should You Borrow Money From a Friend or Bank to Trade Stocks?

February 18th, 2014

This question shows that you are quite ambitious in your journey. It's a great thing to be so motivated and ambitious!

Friend or Family Member

Normally I am 100% against borrowing any kind of money in order to trade or invest. Especially from a friend or family member – it can bring tension into the relationship. Even worse, the relationship could be ruined permanently...

Bank

Banks are a bit different. You really shouldn't borrow from a bank to do your trading, because you are likely dipping into your savings or money you live off of. You never want to be forced to live off your trading income – especially at the beginning.

Bank borrowing shows that you don't have the funds necessary to invest from your own money. Most brokers these days (online brokers, discount brokers) do not have large minimums if any minimums whatsoever.

You can put in $500 to get started, especially at the beginning if you don't even have a month of trading under your belt. It isn't wise to borrow money at the beginning of trading, because you are likely to make rookie mistakes...

Rookie mistakes or trading problems include fat finger error, entering the wrong trade at the wrong time, or mistyping a ticker symbol. There are many factors that come into play if you don't have much experience under your belt.

If you had a Ferrari, and your friend's 16-year-old son asked to borrow the vehicle – would you let him? Would you allow a 16-year-old to drive your expensive, exotic car with hardly any driving experience?

Probably not. Just like it's not wise to borrow an exotic car when you're 16, it's not wise to borrow capital as a new stock market trader.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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This website and content is for information purposes only as Rise2Learn, TradersFly, and Sasha Evdakov are NOT registered as a securities broker-dealer nor an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Rise2Learn, TradersFly, and Sasha Evdakov cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Rise2Learn, TradersFly, and Sasha Evdakov in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Rise2Learn, TradersFly, and Sasha Evdakov accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.