The Biggest Risk in BTCFX Trading: "A sudden statement by an important figure causing a crash" and the largest past loss - 16,139 yen
Hello everyone, JP Morgan! I unexpectedly suffered one of the largest losses in history due to a substantial drop@xi10jun1this is.
The CEO of JP Morgan said, “Bitcoin is a scam! Any employees who trade it will be immediately fired!” which caused a big drop...
This is a reminder of how difficult it is to trade Bitcoin, so in this column I will write about this topic.
※Continuing from the previous post, there is an important notice for those who read the paid content, so please read down to the bottom if you can.
※This column is designed so half of it is free to read, a generous setup. Of course, if you read the paid portion (updated weekly for 400 yen per month, so about 80–100 yen per column), it would be very encouraging!
This Week’s Results (September 9, 2017 to September 14, 2017)
First, as always, the results. I will announce the changes first.
- Last week (to September 8, 2017) assets: 118,485 yen
- This week (to September 14, 2017) assets: 102,346 yen
- Change: -16,139 yen
Oh nooooooo!
It briefly reached 120,000 yen, but yesterday’s crash talk made me fail badly at trying to rebound...
Recently, price movements have been volatile with large swings, making it hard to trade 1 BTC easily.
So I had increased leverage from 5x to 15x. When 1 BTC = 500,000 yen, 5x leverage required 100,000 yen margin to trade 1 BTC, but now it would only require about 33,000 yen margin to trade 1 BTC.
That increases risk control difficulty, so I approached trading with caution, yet ended up with the largest loss in history... Folks, please remember that this kind of risk exists in BTC-FX.
Now, this week’s column, as stated at the top, will discuss one of the risks of BTCFX: “sudden volatility caused by unexpected statements by important figures.”
Why sudden statements by influential figures are a risk
First, a brief digression: there are also people trading USD/JPY in FX.
In USD/JPY, the important risk is the release of US economic indicators. Usually around Friday 21:30–23:00 Japan time, data like initial jobless claims, ISM manufacturing index, non-farm payrolls are announced, and the currency moves a lot based on the numbers.
If you’re trading USD/JPY with short-term trading as the main style, it’s standard to close your positions around the release time and observe.
Now, on the other hand, BTC-FX.
Were the Morgan CEO’s comments this time, and the earlier factional split’s triggered influential statements, pre-planned or not?
Of course, they were sudden.
That’s a huge risk, right?
Because you’re trading without knowing who will speak, when, or about what. You think you’re riding an uptrend, but you could be hit by a rapid drop with no way to set stop-losses. There’s nothing scarier than that.
I certainly took a big loss, but that happened after a downturn and corrective phase. What if the tools couldn’t be used?
Free Summary: BTCFX Risks Are Bigger Than You Think
In short, unless you are serious about trading or simply love trading, BTCFX cannot be sustained. Taxes still can’t be offset against profits.
Anyway, my column is nearly one year old, but I haven’t met anyone who has been doing BTCFX for a year yet.
Only those who are willing to take on such massive risk should do it. BTCFX is, in many ways, truly for advanced traders. The risk is higher than you might think.
Now, regarding this paid column, the charting feature on BitFlyer I usually use seems to be down, so I cannot perform the usual analysis.
There are other chart services, but I cannot confirm using images in this column, so I’m sorry, but I will skip chart analysis this time.
Instead, I will write about future developments in prose.
Regarding the paid column
Recently fx-on sent a notice about possible personal data leakage due to unauthorized access. As a result, credit card payments may be temporarily unavailable, and paid access to the column may be blocked.
Therefore, paid subscribers who pay by credit card, please consider paying by convenience store payment or bank transfer if possible.
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End Corner 1: Latest Tax News!
The National Tax Agency’s site has updated its latest legal opinions regarding Bitcoin.
Here it is →No.1524 Tax relations when profits are generated by using Bitcoin | Income Tax | National Tax Agency
According to this, profits obtained by using Bitcoin are regarded as “miscellaneous income.”
So, profits earned from margin trading like mine are generally miscellaneous income. As I’ve mentioned at the end corner before, in my blog posts (→Bitcoin Margin Trading (BTCFX) and Tax Return! Comprehensive Taxation of Miscellaneous Income? Separate Taxation? | The Investor of the Yutori Generation jun), it seems like netting losses against gains isn’t possible. I wish this could be changed...
Also, according to NewsPicks comments by BitFlyer President Yuji Kanō (No.1524 Tax relations when profits are generated by using Bitcoin - NewsPicks), if you bought Bitcoin for 100,000 yen and used it to buy something worth 500,000 yen, the 400,000 yen difference would be recognized as profit.
When you spend Bitcoin on goods or services, if the price of Bitcoin at the time of payment is higher than at the time of purchase, that difference is recognized as profit. So the same would apply when shopping with Bitcoin on FANCY, so be mindful.
※Continuing, because laws and tax interpretations may change, the method of filing taxes could change. Before filing, be sure to check with your local tax office or a tax advisor.
End Corner 2: Shopping with Bitcoin!
Actually, the overseas e-commerce site “FANCY” allows you to purchase items with Bitcoin! It does cost a bit in shipping, but there are stylish items you won’t see in Japan!
Instructions for using FANCY are summarized on this blog, so please refer to it.
- →Explaining how to create an account, register, set up, and purchase on FANCY | The Investor of the Yutori Generation jun
- →How to purchase (pay with) items on FANCY using Bitcoin | The Investor of the Yutori Generation jun
※Free content ends here. The rest is detailed analysis and future outlook, so it is paid. If you want to read more, of course, your subscriptions as tips are greatly appreciated! Thank you for your continued support!
