Is it possible to get a loan for a stock trading account?
Posted on April 30th, 2010 in Stock Trading | 4 Comments »
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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 ~,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
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4 Responses
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.
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.
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.