[Massive Death?] The Biggest Taboo in Bitcoin Trading: The Result of Skipping Profits by Emotion-Driven, Forced Trades

Hello everyone, massive loss! I did it@xi10jun1here.

I messed up... A trader should never trade based on emotions, especially in such a high-volatility market as Bitcoin.

So this time, I will write about emotional trading in the Bitcoin market, which is a high-volatility environment where you must never fall into this trap.

This Week's Performance (March 3, 2017 to March 9, 2017)

First, as usual, the performance. I will disclose the gains and losses first.

Last week (until March 2, 2017) assets: 73,064 yen
This week (until March 9, 2017) assets: 76,077 yen
Change: +3,013 yen

“Huh? It’s grown. What massive loss? That comment should be ‘Bitcoin FX is scary, be careful!’”

You’re right, in the end I increased my assets, yes.

But it is true that I had a massive loss right after writing last week’s column, and I will describe that from now on.

Cause of the massive loss: selling at the bottom and the wound widening from that

The trigger is what you call, “the bottom you sold is the bottom.”

Around 7:00 PM on March 3, Bitcoin briefly broke 160,000 yen on BTCFX, then showed a rapid drop that seemed to be a sell-off, so I decided, “Sell here!” and placed a market order to sell 2 BTC.

After placing the order, it rebounded and rose sharply. “Oh, it’s going to go up again! This is bad!” I rushed to place a buy order, but it was too late... As the image shows, from around 156,200 yen on the bid to 158,810 yen on the ask, resulting in a loss of 4,983 yen...

The losses continued from there. See the next gif.

Losses of a few hundred to about 1,000 yen kept piling up, and at one point my assets dipped below 60,000 yen, sliding back into the 50,000 yen range!

Uwaaah!

Losing composure widens the wounds

At that time I had completely lost my composure.

When the first nearly 5,000 yen loss occurred, I should have stopped trading with the resolve, “Today is not going to work.” Trading in that state is why I widened the wound like this.

This widening of the wound comes from a psychological urge to “recoup what was lost,” and that is the most dangerous thing in trading.

If you go deeper, you could say, it dulls your judgment; at this point, there has never been a good outcome.

Free summary: Because it’s Bitcoin, you need to strictly adhere to stringent rules!

Even if you know it in your head, if you get swept up, it’s no good. In this market where calm is most important, and with cryptocurrency volatility higher than pound-yen, this is the result.

That’s why in Bitcoin markets, you must strictly adhere to very austere rules. And since these rules are of my own making, there’s a tendency to think, “well, just a little bit won’t hurt.”

From the moment you think that, you’ve already started losing assets. In a high-volatility market, you should be stoic.

Now, the assets did recover after this, but I will clearly lay out the essence and sequence of the calm trader’s mind in the paid section. This time the free portion was a bit short, but the paid portion has a substantial amount of content, so if you’re interested, I’d be grateful if you subscribe.

Endnote Corner 1: Let’s shop with Bitcoin!

Actually, on the overseas e-commerce site “FANCY,” you can purchase products with Bitcoin! It’s a bit expensive for shipping, but there are stylish items you won’t see in Japan!

For how to use FANCY, please refer to this blog post.

→FANCY (Fancy) account creation, registration, and steps to purchase explained! | Investor JunFANCY (Fancy) account creation, registration, and steps to purchase explained! | Investor Jun
→How to purchase (pay with) Bitcoin items on FANCY | Investor JunHow to purchase (pay with) Bitcoin items on FANCY | Investor Jun

Endnote Corner 2: How should Bitcoin margin trading (BTCFX) be taxed?

Tax season is here, but you must report BTCFX earnings too! I wrote a blog post after confirming with the tax office by phone, so please refer to it.

→Bitcoin margin trading (BTCFX) for tax declaration! Is it miscellaneous income as aggregate taxation? Separate taxation? | Investor Jun

Note that even the tax office and tax accountants may have different opinions. Also laws can change, and the method of declaring may change. Before declaring, be sure to check with your local tax office or a tax professional.

Note: the free portion ends here. The rest is detailed analysis and future outlook, so it will be paid content. If you’d like to read more, of course,a tip-like subscription would be greatly appreciated!Thank you for your continued support!