Discipline and patience are more important than IQ
I have seen too many newcomers rushing into the crypto world with dreams of getting rich, especially friends with less than 2000U in capital, who get wiped out by the market in the first month. Last year, I had a beginner with an initial fund of only 1200U, and his hands would shake while placing orders. But I told him that small capital requires careful strategy.
Five months later, his account grew from 1200U to 32,000U, without a single margin call throughout the process. This was not due to luck, but rather strict discipline. Below are three iron rules we summarized from our practical experience that ensure safety and generate profit.
1. Capital management: Divide the principal into three parts, always leave a way out.
Many people think there is no need to diversify with a small principal; this is the biggest misconception. The smaller the capital, the more important proper fund allocation is, which is the first principle of survival.
My method is to divide the funds into three parts:
500U for day trading, focusing only on Bitcoin and Ethereum, the two mainstream coins.
These two coins have good liquidity and relatively controllable volatility; set a profit target of 3%-5%, and take profits decisively when achieved.
400U for swing trading, wait for clear opportunities before taking action. Such trades last 3-5 days, avoid frequent operations to prevent being washed out by short-term fluctuations.
300U as the baseline capital, never use it in extreme market conditions. This is your confidence to make a comeback and a safeguard for dealing with sudden market changes.
I have seen too many people rush in with a few thousand U, feeling ecstatic when it rises and anxious when it falls. True winners know to leave some funds outside the market.
2. Trading strategy: Only follow the trend and do not exhaust yourself in consolidation.
The market spends 80% of the time in sideways consolidation; frequent trading results in just giving the platform transaction fees.
My principle is: if there is no clear signal, patiently wait; if there is a signal, act decisively.
Specifically, I will focus on the 1-hour and 4-hour candlestick charts. Two consecutive bullish candles with increased trading volume may signal the start of a short-term trend; price retracing to an important support level without breaking is a relatively safe entry point.
When profits reach 15%, I will sell half to lock in profits, and set a trailing stop for the remaining, allowing profits to run. This way, I won’t miss out on major trends and can ensure at least part of the profit is secured.
The rhythm of a master is 'stay still if not acting, and hit the target when acting.' The reason my student was able to double his account is that he learned to wait, not to be impatient, and not to blindly chase rising prices.
3. Mindset management: Rules first, use the system to control your hands.
In the cryptocurrency world, the hardest part is often not analyzing the market, but controlling yourself.
I have set a few iron rules for myself:
The stop-loss for a single trade must not exceed 2% of the principal; exit decisively when the point is reached, without any wishful thinking.
Reduce your position by half when profits exceed 4%, and set a stop-loss to protect your capital. This way, even if the market reverses, you can at least ensure you don't lose money.
Never add to a losing position; do not let emotions drag you into a deeper trap.
Many people rush to recover losses after losing money, resulting in deeper traps.
The probability of profit is inversely proportional to trading frequency—this is a lesson learned by countless people with real money.
I now trade no more than 3 times a day, avoiding a lot of unnecessary losses.
The secret of compounding for small funds.
In addition to these three iron rules, I would like to share two strategies that are especially useful for small funds.
Staking is an underrated tool. Many blockchain projects using PoS mechanism allow rewards through staking tokens.
I stake the temporarily unused funds in my swing trading account, with annualized returns usually between 3%-10%. Although not high, it is stable.
Airdrop opportunities are also worth paying attention to. Actively participating in testing network activities or community interactions of potential new projects may lead to free token airdrops.
For small funds, a successful airdrop can achieve significant growth of the principal.
The cryptocurrency market is not a casino; it is a market for realizing cognition. You will never earn money beyond your understanding.
For small funds to grow, the key is to survive first, then accumulate slowly.
I was once a confused novice and experienced painful losses. But it is these lessons that made me understand that in this market, surviving longer is more important than earning quickly.
Remember, rolling 1200U to 32,000U is not based on luck; it relies on rules, patience, and discipline. The bull market will always come when you are prepared, but if you lose all your principal the first time, you will miss the next opportunity.
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