Bitcoin finally falls below 1,000,000 yen! Be careful of margin calls in leveraged trading due to margin drunkenness!
Hello everyone, what a dramatic crash! I never thought I would fall below 1,000,000 yen again@xi10jun1.
The cryptocurrency market has crashed again, and Bitcoin has fallen below 1,000,000 yen, dropping to less than half of its peak, and the NEM I bought has also fallen to about half...。
But there are profits from BTCFX, you know. The overall profit from cryptocurrencies themselves remains in the positive.
And, continuing from the last time, the column title has changed from “Relaxed! Bitcoin Trading Lab” to a new title, “[Weekly] Crypto Trading Life.” Thank you for your continued support.
※This column is designed so you can read half of it for free, like a lump of conscience. Of course, it would be greatly encouraging if you read up to the paid portion (updated weekly, 400 yen per month, so roughly 80–100 yen per column), and I’d be happy if you’d support me as a tip-level subscription!
This week’s performance (2018-01-26 to 2018-02-01)
First, as usual, here are the results. I’ll present the gains and losses first.
- Last week (through 2018-01-25) assets: 60,348 yen
- This week (through 2018-02-01) assets: 60,433 yen
- Change: +85 yen
This week, accessing bitFlyer Lightning FX was still difficult at odd hours. Orders were also hard to fill, so I’m thinking of changing exchanges...
They also don’t seem to be making the annual transaction report. I asked about it last year, but in the end, they cited CM and overseas offices, focusing on acquiring customers, and never built the system. And the crucial server and order-delay issues continue as before, leaving the business at the feet of the market behind.
So I was considering opening a DMM Bitcoin account, but again, I asked about the annual transaction report and haven’t received a reply.
What matters to customers should be clear from the Coincheck incident, right? Is this another exchange risk?
Anyway, pulling myself together, today’s column is about margin drunkenness.
What is margin drunkenness?
Margin drunkenness is a state where the gut feeling of required margin for trading becomes dulled. I made up the term myself, so it’s not a technical term.
For example, with 10x leverage and 1 BTC = 1,000,000 yen, the required margin is 100,000 yen.
If 1 BTC = 2,000,000 yen, the required margin becomes 200,000 yen by simple calculation.
In other words, the risk has increased accordingly. Of course. If you could trade with 100,000 yen before, now you have to put up 200,000 yen.
So when trading the same 1 BTC, if you are in a margin-drunk state, you may take on unforeseen risks. I call this “margin drunkenness.”
Until recently, the market had been in a rising trend, so the amount of required margin kept rising.
But recently the market has been in a downward trend, so there is a little more room in the required margin.
For example, when 1 BTC = 2,100,000 yen, trading 1 BTC with 15x leverage requires 140,000 yen. So I traded in units of 0.01 BTC, i.e. 1/100, which means the required margin is also 1/100, so with 0.01 BTC you can trade with a margin of 1,400 yen.
But now Bitcoin’s price is falling, so if 1 BTC = 1,050,000 yen, i.e. half, the required margin also halves. Therefore, trading 1 BTC would require 70,000 yen, 0.1 BTC would require 7,000 yen, and 0.01 BTC would require 700 yen as margin.
Free summary: Recognize your margin sensation to avoid margin drunkenness
With my low-capital trading, you could say the risk appetite increases, but it also makes you more prone to taking unnecessary risks.
Without a sense of the required margin, you can end up taking unanticipated risks and suffering large losses.
Trading is already highly volatile, so having this sense is important, isn’t it?
So this paid column will discuss future prospects.
Endpiece 1: Latest tax information! Updated 2017-12-08!
The National Tax Agency’s site has updated the latest legal views on Bitcoin.
Here it is →No.1524 Taxation on profits from using Bitcoin | Income Tax | National Tax Agency
And on 2017-12-01, a document on how to calculate income was posted on the National Tax Agency site.
Here it is →How to calculate income related to virtual currencies (pdf) | National Tax Agency
※Please note that laws and tax interpretations may change, which could affect filing and payment methods. Before filing, be sure to confirm with your nearest tax office or a tax professional.
After all, BTCFX profits remain categorized as miscellaneous income. I hope they will soon be taxed as separate taxation with 20% tax...
Endpiece 2: Plan in progress
I’m thinking of writing more about new cryptocurrency-related news and information, but I haven’t come up with anything yet. I’ll post it here as soon as a plan is decided!
※ The free portion ends here. From now on, it will be detailed analysis and future prospects, so it is paid. If you want to read more, of course, or if you’d like to subscribe as a tip-based donation, I would be very encouraged! Thank you for your continued support!
