How My Realized Losses from Margin Trading Exceeded 2 Million Yen

How I messed up with a margin short sale of Kobayashi Pharmaceutical (4967).

This is a record of the first huge loss of my life, left here as a note to myself. If someone in the same situation is struggling, I hope it gives them even the slightest bit of calm, or something they can relate to.

Table of Contents

Before I Started Margin Trading

With the atmosphere around the new NISA in 2024, I was buying investment trusts on a recurring basis and also trading individual stocks. On top of that, I happened to have more than 600,000 yen in unrealized gains on Nihon M&A, a stock I had bought, so I was thinking, “Maybe I’m actually good at stocks?”

2024/03/22: I Saw the Beni-Koji News and Thought, “I Can Win by Selling”

What came across my feed was the so-called beni-koji issue.

March 22, 2024: Kobayashi Pharmaceutical announces “stop use” and “voluntary recall” of beni-koji-related products

At the time, my reflexive thought was this:

If the news is this big, the stock price will go down, right? If I sell here, I can win.

I thought, it has to be now!! and hurriedly applied to open a margin trading account.

2024/03/26: The First Short Sale (2000 Shares)

This is where hell began.

At the opening, I shorted Kobayashi Pharmaceutical. 2000 shares. The average price was about 4900 yen.

After the market opened, the stock price did not fall at all. If anything, it kept rising. This is hindsight, but around 4800 yen was the bottom for the beni-koji incident.

Of course, I thought there was no way I could lose, so I did not cut my loss.

2024/03/29: Another 500 Shares (Doubling Down on a Bad Move)

A few days later, I added another 500 shares to the short.

Around this time, the only thing in my head was basically this:

If I raise my average entry price even a little, I probably won’t lose money. If it drops even once, I can get out in the worst case.

2024/04/01: I Bought Back for the Time Being

I got scared once and bought back almost everything. I remember feeling frustrated because it was the first time I had cut a loss.

It was a loss cut of a little under 300,000 yen, but the feeling of “I want to make it back” started to appear.

2024/04/02–04/04: Averaging Into the Short Until It Reached “3100 Shares”

The next day, I entered again. Then I kept adding to the short, and before I knew it, the position had grown to 3100 shares.

At that point, all I could think about was that I was absolutely going to make it back with a “short” on “this stock.”

Days of Monitoring Hell

• Stock price
• Margin balance
• Short interest
• Yahoo Finance message boards
• IR/news on X

While I was awake, I checked (monitored) the information above far more often than once every 10 minutes.

Especially on the Yahoo Finance message boards, there were people who were losing money in the same way, and also people taunting them, so I kept watching. Actually, I was getting into ordinary flame wars there. There were way too many comments like “the short pigs are getting roasted, paying the reverse stock-loan fee again today, oink lol,” and I was seeing red.

And on the message boards, I learned this phrase:

Buy accidents, sell incidents

With the beni-koji issue, there had been harm to people, so it felt like an incident to me. But in the end, it did not become an incident, so it was an accident.

A Margin Call Starts Looming

I received a notification in the SBI Securities app. It was something like, “At this rate, you may get a margin call” (minimum margin maintenance ratio).

Every time a notification came, I deposited more money to resolve it and keep myself alive.

2024/05/24: Bought Back Part of It in the 6000-Yen Range

On 2024/05/24, the stock price jumped to around the 6100-yen range. Here, I bought back 2500 shares to close them. That was because a margin call would definitely be confirmed otherwise.

At this point, the accumulated loss-making settlements (realized losses) had exceeded 1.6 million yen.

It is strange, but what I felt then was stronger as a “sense of release that the monitoring hell had ended once” than as “the pain of taking a huge loss.”

I think the days of hoping for bad news about Kobayashi Pharmaceutical every day and arguing on message boards had really gotten to me mentally.

2024/08/01: Ending Everything

After that, while rotating through other stocks, I dragged it out for a while longer, and on 2024/08/01 I fully cleaned it up. The accumulated loss-making settlements (realized losses) on Kobayashi Pharmaceutical reached about 2 million yen. (In reality, because I had partially hedged by holding both long and short positions, the actual loss was kept to around 1.6 million yen, but…)

Rules to Prevent a Repeat

As a note to myself:

• Do not enter a short just because something looks like an incident (the market does not move the way I expect)
• If I start thinking, “I want to end this without taking a loss,” that is a warning sign
• Do not look at message boards (what comes through is not accurate information, but information mixed with people’s emotions)
• If thinking about an open position starts disrupting sleep, work, or daily life, consider exiting at that point
• Do not prolong things by depositing more money (do not create a situation where a margin call is looming)

To People in the Same Situation

Cutting a loss is not defeat; it is retreating.

A day will definitely come when you can think even a huge loss was a good experience.

I cannot say anything too irresponsible, but somehow or other, life works out, so if it is truly painful, please close the position.