Article source: Shenchao TechFlow
Written by: Adam
Compiled by: Shenchao TechFlow
Before getting into the main topic, please remember that trading is a complex and high-risk activity.
There is no method that allows you to grow your account quickly in a short time without experiencing any losses.
In fact, those who are able to grow their accounts quickly often take on significant risks, sometimes even close to going all-in.
The focus of this article is not to tell you to patiently wait for ideal market conditions or to teach you how to analyze the market in depth.
On the contrary, I will share some methods to help you achieve rapid account growth while reasonably controlling risks.
If you are not yet familiar with fundamental concepts like 'risk management,' I highly recommend reading this article on risk management first.
If you find this article helpful, you might want to check out other content on the blog or join the Tradingriot Bootcamp for complete video courses, access to a private Discord group, and regularly updated trading strategies.
Why choose to trade in niche markets?
If you primarily trade in large markets like BTC, ES (S&P 500 futures), major forex pairs, or gold,
You will directly face retail traders like yourself while also competing with large institutional players, quantitative companies, and others.
This is mainly because these markets are highly liquid, allowing large fund players to easily participate in competition.
Although trading these markets is not impossible, if you don’t have enough capital, there are actually more advantages in lower liquidity markets.
For example, many altcoin derivatives, NFTs, or on-chain coins are not very attractive to large players because these markets lack the liquidity to satisfy their trading scale requirements.
When I started to delve deeper into the altcoin market, I often found the clearest trading signals in markets with lower liquidity.
At first, I was very confident in these 'low-barrier' markets, but when I tried to execute large positions, I found that my orders stood out significantly on the order book, making me realize the disadvantages of insufficient liquidity.
However, for small account traders, this issue does not require too much concern because it is not until your order size reaches high five or six figures that this liquidity issue will truly affect you.
Taking Lina on Velo as an example, the chart shows that potential breakout signals for Lina could already be observed a few days before the breakout occurred.
Such opportunities can bring significant returns, but we also need to consider potential risks.
By checking Lina's trading volume and open contract data on the Laevitas platform, we can see that before the breakout occurred, Lina's daily trading volume was 16 million, and the open contracts were 4.5 million.
If this trade fails and you hold a large position, your stop-loss may lead to actual losses that greatly exceed expectations due to slippage. But for small account traders, their position sizes are smaller, and stop-losses can often be triggered near invalid points, so they do not face this issue.
Low market cap alternatives to derivatives are not the only things you can participate in. On-chain tokens or NFTs are as well.
When trading, the most important thing is to be aware of where the 'meta' currently is.
For example, NFTs were very popular a few years ago, but they have now faded away.
You need to understand the speed of information dissemination in this field to avoid taking unnecessary risks and not miss significant gains due to premature selling.
On-chain trading is very challenging. Although you may see many success stories on platform X, the likelihood of appreciating '1 SOL' to '1000' is very low.
In on-chain trading, there are some unique strategies you can employ, such as tracking different wallets, analyzing position distributions, or simply relying on common sense to avoid tokens heavily promoted by KOLs.
In addition, you will find that using simple support and resistance levels or trading indicators is usually enough for trading, especially for larger market cap tokens with lower risks of running away.
Day Trading
Prices have fractal characteristics. This means that if I show you a chart, you might find it difficult to determine whether it's a daily chart, a monthly chart, or a 5-minute chart.
Moreover, for highly liquid markets, if you are not familiar enough, it can be hard to distinguish exactly which market it is.
For example, the above shows the 5-minute chart of XRP.
If you choose swing trading, the trading frequency will be relatively low. Even when profitable, most of the time you will just be patiently waiting for opportunities, which typically occur only 1-2 times per week in each market.
I will discuss swing trading in detail later, but day trading is different; it provides instant feedback with numerous small fluctuations to trade on each day.
Therefore, if you engage in day trading and execute a small number of trades in each trading session, theoretically, your account funds will grow faster.
However, day trading is one of the most challenging areas of trading. A moment of distraction or a small mistake can lead to losing all your gains in just a few minutes, just as quickly as you made money.
I recommend every beginner trader to try day trading because it allows you to quickly gain market feedback and accelerate the learning process.
One major advantage of day trading is that you can focus on more liquid markets, making trading scalable. If you concentrate on BTC, ETH, ES, NQ, gold, or major forex pairs, you won’t encounter limitations on position sizes.
Nevertheless, day trading is very difficult and is not suitable for everyone. It requires a high level of focus, quick decision-making, decisive stop-losses, and various other skills.
Therefore, it is very important to develop detailed trading plans and strategies for each step. Once you enter a trade, emotions can affect your judgment, and a pre-prepared plan will come in handy.
There are many methods for day trading, such as operating through price movements, order flow, news, technical indicators, etc. Each method has its applicable scenarios, and there are no absolute advantages or disadvantages.
If you're interested in my day trading and swing trading methods, you can check out the Tradingriot Bootcamp, which is a training course specifically designed for traders.
Trading with other people's assets
In recent years, the field of online funding providers (prop firms) has developed rapidly.
If you are new to these companies, you need to pay an assessment fee first and adhere to trading rules in a demo account to gain access to a funded account.
This model allows you to trade with larger funds, and the only cost is paying the assessment fee.
However, if you are not familiar with trading, you may waste funds frequently paying assessment fees and never obtain a funded account.
Although funding providers often spark controversy, I believe this is a very good opportunity for those with trading capabilities but lacking capital.
With the rapid expansion of this field, it has become particularly important to choose a reputable and robust company. In recent years, we have seen some companies refuse to pay profits, set rules that are almost impossible to pass, or even go bankrupt directly.
I may be a bit biased here because I am directly involved with Breakout funding providers. But if you focus on cryptocurrency trading, Breakout is a very good option. It offers daily payment services with no record of payment refusals, and the assessment rules are also very reasonable.
High time frame analysis and low time frame execution
If you find day trading unsuitable for you, there's no need to be discouraged. This method can also help you grow your account quickly while being easier to operate.
In fact, this method is not limited to small accounts; I have personally completely shifted to this trading style because I no longer want to spend a lot of time staring at charts.
Nevertheless, I still want to emphasize that the experience I gained over the past few years in day trading, studying different futures markets, and understanding market microstructures has been very important to me, and I am glad to have gone through these.
Although we mentioned that prices have fractal characteristics, key points in the market on higher time frames, such as daily, weekly, or monthly charts, often elicit a bigger market reaction than points on a one-minute chart. This is because more traders and algorithms pay attention to these key points on higher time frames and act accordingly.
For example, at the end of February 2023, Solana retraced after rising to a daily resistance level, falling to the next daily support level. If a short position is established at the daily close with a stop-loss based on the 1-day ATR, a 2.5 times risk-return (R) can be achieved in 18 days.
Of course, achieving a 2.5 times return in 18 days is quite good. But if your account is small, for example, with a single trade risk of $100, making $250 may not be exciting; in contrast, if the single trade risk is $10,000, earning $25,000 appears very substantial.
If you want to quickly grow your account funds, you can switch to lower time frames while following the trading ideas of higher time frames (HTF). This means your goals remain the same, but by executing trades on lower time frames (LTF), you can reduce stop-loss ranges, thereby increasing position sizes.
You don’t need to switch to 1-minute or 5-minute charts; H1 or H4 time frames are sufficient. Focusing too much on low time frames may improve risk-reward ratios but also significantly increase the risk of being washed out before the market moves.
If you choose the H1/H4 time frames, you may still fail to get ideal entry points or be stopped out before the market moves. However, based on my experience, giving high time frame trading ideas 1-3 attempts at low time frame execution usually yields better results than relying solely on daily charts.
Conclusion
Trading is not easy; it requires time and patience. But as long as you manage your risks well, small funds have the opportunity to gradually grow into large amounts.
In trading, always try to step out of your inherent thinking framework, maintain patience in execution, and develop a comprehensive trading plan.
