Borrowing at 10% for a possible 18%? I don't think that's a good enough risk/reward ratio. Save it for when all the stars are lined up and you have a shot of making an outsized return in a relatively short period of time. But to just borrow 100K at 10% for "investment" returns is not a good idea.
You know you shouldn't do this. Part of becoming a good trader is having the discipline to build a bankroll paraphrasing Marty Schwartz. But if you have to ask you clearly are going to do it. The only way to do this is to request checks from the card company telling them you are going to do a balance transfer and write the check to your account. Some brokers will not accept this and your Credit Card company may screen the transaction I believe most cards nowadays have policies against borrowing to invest in the market. I would suggest you risk no more than 25k. You will feel the pain of having blown the money but you can pay it off in about 6yrs. Of course think about being in the hole 100K 3 yrs from now with the Fed funds rate at about 8% and credit card rates at 25%. Nice:eek:
Many cards will let you do a balance transfer, but its rare that a credit card will let you actually pull cash out, and most limit you to $2K or $5K. Although very infrequently a card will let you pull cash out to the full limit of the credit line, no restrictions. Often this kind of card is a card that a business would get for temporary working capital. It is not a card normally issued to typical credit card customers. I suppose one alternative is for you to use the card to rack up daily expenses while trading with your free cash, essentially drawing an advance against yourself. Of course, if you are really following the Suzi Orman/ Smart Money plan, you wouldn't be trading at all in the first place, neither would you be starting any other business or doing anything else crazy like that. Be foreward, almost all traders early on experience a significant, large loss. Read Threei's book, Techniques of Tape Reading where he discusses an early, large loss which put him right up against the edge. To bear this loss with borrowed money than with savings is a bad way to start because there's no way to quickly reload after that, and you end up like certain posters on ET who I won't mention (they won't leave trading but they are too broke to trade). Although Marty Schwarz may not like it, a number of professional traders have gone into their credit cards when they started, but usually they do this on the 'final lap' when they have some rational belief that things have clicked and they can really trade. (How long does it take? LBR, Threei and Mark Fisher of NYMEX Symposium fame ALL say TWO years. This is no joke. You have to keep it going for TWO years to have a shot. If you are just starting and you are already up against it, it won't work out. You need to save more.)
You should easily be able to get balance transfers checks under 3 or 4% for at least 6 to 12 months. I don't see how 10% is even a deal. Whether or not you should do it, is up to you. Just make sure to understand the bankruptcy procedure in case you blow it.
If you have decided to jump over the cliff, go ahead, because at this moment you wont listen to NOBODY.
Why am I the only one who sees a Catch 22 here? If you have the assets to qualify for a 100K line of credit with a credit card, then why don't you have the assets to trade?
The only case where I would consider getting an outside loan to trade would be to pad an account up to 25K to satisfy the PDT requrirement, and only if you have the discipline to not trade the borrowed portion of the account.