Is the Bitcoin market also a low-volatility market? The result of unnecessary losses during a stagnant market...
Hello everyone, steady trading! I’ve been steadily taking losses@xi10jun1here.
Since the big crash last time, my assets have made a glorious comeback and have now become an asset that steadily incurs losses again…
Bitcoin certainly has high volatility, but that doesn’t mean its price always moves violently.
This Week’s Performance (March 10, 2017 – March 16, 2017)
First, as usual, the performance. I’ll state the changes first.
- Last week (until March 9, 2017) assets: 76,077 yen
- This week (until March 16, 2017) assets: 74,220 yen
- Change: -1,857 yen
This is probably the first loss report since I started this column’s performance reporting. Yikes!
From the performance last week after the huge loss the week before, I couldn’t cover the loss this week…
Now, what does it mean to have steadily lost money?
There are times when Bitcoin trades with low volume
First, please look at the image below.
How about it?
Normally you would see 10–30 BTC on the order book appearing and disappearing, and occasionally orders with large show orders of up to 100 BTC getting filled, like during a big market move; that is how cryptocurrency markets usually behave.
In this trading session, the book was so thin that it was hard to believe there had been that kind of brutal buying and selling you usually see.
Thus, the Bitcoin market isn’t always characterized by violent price swings.
Originally, Bitcoin tends to have higher trading volume on weekends when stock or forex markets are closed, than on weekdays. This day was a weekday, but there were days with that little trading volume as well.
Trading on such thin books doesn’t yield profits
Now, I had placed a sell order earlier, and the result was as follows.
Stop loss… This week, this kind of trading continued, and the losses slowly grew.
Even in such markets, price can spike, but sometimes it doesn’t move as much as hoped, and you end up with a stop-out at the stop loss.
Moreover, it gets tricky because knowing the price movement potential of Bitcoin can backfire here.
In other words, if you expect “Bitcoin moves violently” or “once a trend starts it will move a lot,” you trade with that high expectation, causing delays in the settlement.
With this kind of biased mindset, you end up thinking you’re cutting losses when in fact you’re just losing more money.
Bottom-line summary: Even Bitcoin has low-volatility markets
As seen in the gif earlier, Bitcoin markets do have periods of low volatility with little trading. Recently, there had been many boards near 100 BTC, so perhaps I had become too accustomed to that environment.
As I said in previous columns, it’s more important to manage positions than to predict price moves. Prices can move in any direction, so you must carefully decide how to take positions in response to current price action, or when to close out.
Focusing only on furious volatility can cause you to forget this, leading to unnecessary losses. I learned that well from this loss.
Next week I’ll push for a new high! Targeting 1 BTC!
Endnote Corner 1: Shopping with Bitcoin!
Actually, the overseas e-commerce site “FANCY” allows you to purchase products using Bitcoin! It does incur a bit of shipping, but there are stylish items you won’t see in Japan!
We’ve summarized how to use FANCY on this blog, so please refer to it.
- →FANCY (Fancy): Account creation, registration, settings, and how to purchase products explained! | Investor jun of the Silent Generation
- →How to buy (settle) FANCY items with Bitcoin (Bitcoin) | Investor jun of the Silent Generation
Endnote Corner 2: How to file taxes for Bitcoin margin trading (BTCFX)?
You must report BTCFX profits as well! I’ve written a blog post about confirming this with the tax office by phone, so please refer to it.
Note that even tax offices and tax accountants may have differing opinions. Also, laws can change, which may alter how you file. Before filing, be sure to check with your nearest tax office or a tax professional.
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