As a veteran who has been in this industry for many years, I have seen too many new friends rush into the market with a few thousand U, thinking that 'one day in the crypto world is a year in the human world.' Their biggest misconception is that with a small principal, they must take a gamble, resulting in a quick exit.
Today, I won't talk about complicated technical analysis; instead, I will share three rules that can help small principals survive and grow.
01 Clearly dividing the money is the first step to survival
The most common mistake beginners make is thinking that with a small principal, they might as well go all in. This is no different from gambling; one bet determines life or death. The correct approach is exactly the opposite: the more limited the principal, the more careful the allocation needs to be.
My suggestion is to divide your money into three parts, each with a clear mission:
Guerrilla position (about 30%): This money is used to maintain a feel for the market and only engage in short-term trading of mainstream coins. Set a strict rule for yourself to take partial profits once reaching 2%-3%, and take profits while you can. Its core purpose is not to make big money but to keep you sensitive to the market while preventing you from touching high-risk contracts.
Main position (about 30%): This is your main force for profit. Patiently wait for macro policies or major technological updates that can create clear trends before making a move. Capturing one wave may equal several months of work from a guerrilla position.
Anchor position (about 40%): This is your life-saving money, your bottom line. No matter how crazy the market is, even if you see others seemingly becoming rich overnight, this money must not be touched. It guarantees that you won't be washed out during extreme market fluctuations, always providing you with capital to make a comeback.
Remember this data: Individuals who invest no more than 5% of their total funds in a single project have an eleven times lower probability of liquidation than those who invest with full leverage.
02 Understanding trends is more important than trading every day.
The market is mostly chaotic and range-bound; the truly worthwhile trending opportunities may only arise a few times a year. Frequent trading is essentially working for the exchange and can easily lead to a breakdown in mindset.
No signal, no action. Learn to patiently observe key support and resistance levels, wait for the market to establish direction itself, and take action only after a breakthrough or breakdown is confirmed. Don't always think about guessing tops and bottoms.
Profits should be locked in. When your holdings reach a profit of 15%-20% of your principal, a practical strategy is to withdraw the principal portion first and let the profits continue to run. This can secure core earnings and relieve your psychological pressure.
If the trend is not right, decisively stop-loss. Never harbor the illusion of 'just wait a little longer for a rebound.' In the face of trends, any luck is an accomplice to losses. Set an automatic stop-loss point (e.g., no more than -15%) and let discipline replace emotions in decision-making.
03 Controlling your hands is the highest form of self-discipline.
In this market, technology is often not the key; mindset and discipline are. Small capital is most afraid of emotional trading.
Stop-loss is a lifeline: You must set a maximum loss limit for each trade before opening a position (recommended not to exceed 1.5%-2% of account funds) and never manually cancel it. Most significant losses stem from the lucky mindset of 'just wait a little longer.'
Avoid greed in profits: Take partial profits once your target is reached. Don’t fantasize about selling at the highest point; the market won’t give you an extra profit because of your greed.
Pause after losses: If you trigger a stop-loss twice in a row, force yourself to rest for more than 4 hours to avoid 'revenge trading.' The market is never short of opportunities; what’s missing is the ability to seize opportunities after losing all capital.
The three major pitfalls that beginners should avoid.
Blindly chasing high 'meme coins': FOMO-ing into a coin that has skyrocketed on social media often results in buying at a high position. MIT research confirms that 68% of popular coins on Twitter are halved within a month. For beginners, only trade coins you have deeply researched the white paper for.
Treating trading as a 'tool to recover losses': Being eager to recover losses after a downturn, increasing position size and trading frequently is the most dangerous. Once the mindset collapses, operations will inevitably distort, leading to a vicious cycle of increasing losses and desperation.
Believing in 'inside information': If it can really make you money, why would others tell you for free? Remember, free lunch often comes with traps.
Lastly, I want to share something practical with you. One beginner I guided started with 800U and grew their account to 18,000U in four months without any liquidation. Their secret was simply engraving the three iron rules I mentioned above into their DNA.
Having little capital is never a disadvantage; it can force you to develop the most cautious habits and the strongest discipline. These qualities are the ultimate core competitiveness for you to control larger funds in the cryptocurrency space in the future.
The most expensive thing in the cryptocurrency world is not money, but the time wasted due to wrong actions. Steady progress and survival will allow you to wait for the opportunities that truly belong to you.
I hope these insights are helpful to you. If you find value in it, we can delve deeper into how to analyze project fundamentals in the future. I wish you a steady and far-reaching investment journey in the cryptocurrency world.
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