Is the price range too wide, causing losses in the market? Bitcoin trading becomes even more brutally difficult!
Hello everyone, short-term trading! The carnage of stop-losses increasing too much has been like a nightmare@xi10jun1here.
Bitcoin is continuing to reach new highs, isn’t it….
There’s no sign of a drop, and the market has become very scary to position in.
※This column is designed so that half of it can be read for free, a bundle of conscience. Of course, if you read up to the paid portion (updated weekly for 400 yen per month, so about 80–100 yen per column), it would be a great encouragement!
This week’s results (May 5, 2017 to May 11, 2017)
First, as usual, the results. I’ll announce the gains and losses first.
- Last week (until May 4, 2017) assets: 97,928 yen
- This week (until May 11, 2017) assets: 95,662 yen
- Change: -2,266 yen
This week also saw a decline in assets… Actually I briefly recovered to the 100,000 yen range, but soon after there was a stop-loss festival and it ended up like this…
Anyway, when I sold, prices rose, and when I bought, they fell, making it impossible to profit the way I used to.
In this column I’ll reflect on the mechanism of these losses. It’s painful….
What market loses when you stop-loss?
The big loss this week was caused by making too many stop-losses.
Huh? You think so. Don’t worry, I’m the one most surprised by my losses, so calm down.
Seeing is believing, so please first look at the next image.
Do you understand? This is the range of price movement—the cause of my losses.
In other words, when you hold short and long positions after the price range has widened too much, even a slight move in the opposite direction expands unrealized losses, and stopping losses makes the loss bigger.
And to avoid big losses you cut losses, but as a result only losses accumulate. Foolish, isn’t it….
Basically, when you take a position you place a market order, but in such an order book, it becomes a method that easily incurs unrealized losses.
And worse, the biggest reason was realizing this too late. I focused only on the thick parts of the order book in the direction I wanted to position (profitable direction) and failed to read the finer order book information.
Free summary: Take positions while watching the order book
When selling or buying, if you only pay attention to the direction that seems profitable, you can suffer large losses when the price range moves widely.
I think this is something those who are used to stop-losses would fall for. In fact, I felt I was stopping losses far too often.
“Then how should you handle such a book?” will be addressed in the paid portion.
End segment 1: Let’s try shopping with Bitcoin!
Actually on the overseas e-commerce site FANCY, you can buy products using Bitcoin! It costs a bit for shipping, but there are stylish items you won’t see in Japan!
For how to use FANCY, please refer to this blog post.
- →Explaining how to create an account on FANCY, register, set up, and the flow of product purchases | Investor of the Yutorise generation jun
- →How to purchase (settlement) FANCY items with Bitcoin (Bitcoin) | Investor of the Yutorise generation jun
End segment 2: How should I handle tax filing for Bitcoin margin trading (BTCFX)?
You must properly file taxes on BTCFX profits too! I wrote blog posts based on the results of calling the tax office, so please refer to them.
※Even tax offices and tax accountants may not share the same view. Also laws can change and filing methods may change. Before filing, be sure to check with your local tax office or a tax professional.
※ The free portion ends here. The rest covers detailed analysis and future outlook, so it is paid. If you want to read more, or as a tip-like donation, subscribing would be very encouraging! Thank you for your continued support!
