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Taking A Loan To Trade Stock Markets Good Or Bad

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This one question does rounds in every traders mind especially those who do not have much money to trade. They keep reading everywhere traders making huge money trading and they get inspired and want to make the same amount of money.

In fact a lot of traders have asked me this question a lot of times. Sir, can I take a loan and trade your strategies.

My answer is always NO. Then they ask why? My answer is pretty simple. Do not look at the profits you will make, more important than that is will you be able to trade in peace of mind?

But here is one of customers who did the course recently saw the profit potential and took a loan of Rs. 2 lakh and is trading the non-directional strategy.

Your Results May Vary

Your Results May Vary

This is the power of properly hedged non-directional trading. Though I must have told him not to take a loan as it increases stress this person saw the benefits and took a loan.

Most people do not know or forget that stock trading is a business, it is not a job or just another way to make money. It is pure business where buy and sell takes place. Stock market investments are subject to market risk also just like any other business, only difference is that the entry level to this business is pretty easy. Anyone above the age of 18 can enter this business. Now days you can open a free Demat trading account in a lot of companies. In fact we keep seeing these ads everywhere.

The real reason why I am against taking a loan and trading is that you have an obligation. I see that in Mar 2017 personal loan interest rates currently is anywhere from 12% a year to 20% a year. This is where you will trade in panic and I do not like trading in panic. I want to trade in peace of mind.

So if you are making more than the interest on the loan you have taken its a personal decision to take a loan to trade or not. But be very sure that you are making more than the loan interest rate every year from trading. If you are not making more than the interest rate on the loan do not take a loan and trade. If you make more than the interest rate on the loan, then the decision is entirely yours.

You must include the stress you will get to pay back the monthly installment of the loan. If you can conquer stress and make more than the interest rate on the loan then you may decide to take a loan and trade, but do not take too much loan.

But if you cannot trade in stress and are not making more than 15% in trading every year then please avoid taking a loan to trade.

I am very happy that my customers are doing very well in trading. They are making much more than they have paid which is very good.

If you want to pay for the conservative options and hedged future course please pay here.

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About the author: I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

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