If you engage in day trading and execute a small number of trades during each trading period, theoretically, your account funds will grow faster.
Author: Adam
Compiled by: Deep Tide TechFlow
Before getting into the main topic, it is important to 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 period without experiencing any losses.
In fact, those who can grow their accounts quickly often do so at great risk, even close to betting everything.
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 familiar with basic concepts like 'risk management,' I strongly recommend that you read 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 the complete video course, access to a private Discord group, and regularly updated trading strategies.
Why choose to trade in niche markets?
If you mainly trade large markets such as BTC, ES (S&P 500 futures), major forex pairs, or gold,
You will be directly facing retail traders like yourself while also competing with large institutional players, quantitative firms, and others.
This is mainly because these markets have extremely high liquidity, allowing large capital players to easily participate in competition.
While trading these markets is not impossible, if you do not have sufficient funds, there will actually be more advantages in lower liquidity markets.
For example, many altcoin derivatives, NFTs, or on-chain tokens are not very attractive to large players because these markets have insufficient liquidity to meet their trading scale needs.
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 confident in these 'low-threshold' markets, but when I tried to execute large positions, I found that my orders stood out on the order book, which made me realize the disadvantages of insufficient liquidity.
However, for small account traders, this issue does not need to be overly worried about because this liquidity problem will only truly affect you once your order size reaches the high five or six figures.
Take Lina on Velo as an example; from the chart, it can be seen that potential breakout signals for Lina were observable several days before the breakout occurred.
Such opportunities may bring significant returns, but we also need to consider potential risks.
By checking Lina's 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 far exceeding expectations due to slippage. However, for small account traders, their position sizes are smaller, and stop-losses are often triggered close to invalid points, so they do not face this problem.
Low market cap alternative derivatives are not the only things you can participate in. On-chain tokens or NFTs are also included.
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 have now faded away.
You need to understand the speed at which information spreads in this field so that you can 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 probability of increasing '1 SOL' to '1000' is very low.
In on-chain trading, there are some unique strategies that can be employed, such as tracking different wallets, analyzing position distributions, or simply relying on common sense to avoid tokens that are heavily promoted by KOLs.
In addition, you will find that using simple support and resistance levels or trading indicators is often sufficient to deal with trading, especially for those tokens with larger market caps and 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 judge whether it is a daily chart, monthly chart, or a 5-minute chart.
Moreover, for high liquidity markets, if you are not familiar enough with them, it is also difficult to distinguish which specific 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 if profitable, most of the time you are just patiently waiting for opportunities, which usually only appear 1-2 times each week in each market.
I will discuss swing trading in detail later, but day trading is different; it provides immediate feedback with numerous small fluctuations to operate on daily.
Thus, if you engage in day trading and execute a small number of trades during each trading period, theoretically, your account funds will grow faster.
However, day trading is one of the most challenging areas of trading. A slight distraction or a tiny mistake can cause you to lose all profits in just a few minutes, just as quickly as you can make money.
I recommend that every beginner trader try day trading, as it allows you to receive quick feedback from the market and accelerates the learning process.
One major advantage of day trading is that you can focus on markets with high liquidity, making trading scalable. If you focus on BTC, ETH, ES, NQ, gold, or major forex currency pairs, you will not encounter limits on position size.
Nevertheless, day trading is very difficult and not suitable for everyone. It requires a high level of focus, quick decision-making, and decisive stop-loss abilities.
Therefore, it is very important to formulate detailed trading plans and strategies for each step. Once you enter a trade, emotions can affect your judgment, and the prepared plan will come into play.
There are many methods for day trading, such as operating through price movements, order flows, news, technical indicators, etc. Each method has its applicable scenarios, and there is no absolute superiority or inferiority.
If you are interested in my day trading and swing trading methods, you can check out the Tradingriot Bootcamp, which is a training program designed specifically for traders.
Trading with other people's assets
In recent years, the field of online funding firms (prop firms) has developed rapidly.
If you are approaching this type of company for the first time, you need to pay evaluation fees first and comply with trading rules in a simulated account in order to gain access to a funded account.
This model allows you to trade with larger capital, and the only cost is paying the evaluation fees.
However, if you are not sufficiently familiar with trading, you may waste money on frequent evaluation fees and never obtain a funded account.
Although funding companies often spark controversy, I believe this is a great opportunity for those who have trading abilities but lack funds.
With the rapid expansion of this field, it has become particularly important to choose a reputable and stable company. In recent years, we have seen some companies refuse to pay profits, set rules that are almost impossible to pass, and even go bankrupt directly.
I may be a bit biased here because I am directly involved with Breakout funding companies. But if you focus on cryptocurrency trading, Breakout is a very good choice. They provide daily payment services and have never had a record of refusing to pay, while the evaluation rules are also very reasonable.
High time frame analysis and low time frame execution
If you find that day trading does not suit you, do not 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 fully transitioned to this trading style because I do not want to spend a lot of time staring at charts anymore.
Nevertheless, I want to emphasize that the experience of engaging in day trading, studying different futures markets, and understanding market microstructure over the past few years has been very important for me, and I am grateful to have gone through these.
While we mention that prices have fractal characteristics, the key points of the market on higher time frames such as daily, weekly, or monthly often bring greater market reactions compared to points on a 1-minute chart. This is because more traders and algorithms pay attention to these key points on higher time frames and take action accordingly.
For example, at the end of February 2023, Solana rose to the daily resistance level and then fell back to the next daily support level. If a short position was established at the daily close and a stop-loss based on the 1-day ATR was set, a 2.5 times risk reward (R) could be achieved within 18 days.
Of course, achieving 2.5 times returns within 18 days is very good. But if your account is small, for example, if the risk per trade is $100, then making a return of $250 may not be exciting; in contrast, if the risk per trade is $10,000, then making a profit of $25,000 would seem very impressive.
If you want to grow your account quickly, you can switch to lower time frames while following the trading ideas of higher time frames (HTF). This means that your targets remain unchanged, but by executing trades on lower time frames (LTF), you can narrow the stop-loss range, thereby increasing position size.
You do not need to switch to 1-minute or 5-minute charts; H1 or H4 time frames are sufficient. Focusing too much on lower time frames may increase risk-reward but also significantly increase the risk of being washed out before the market moves.
If you choose H1/H4 time frames, it is still possible not to achieve ideal entry points or to be stopped out before the market starts moving. But based on my experience, giving high time frame trading ideas 1-3 attempts on lower time frames usually yields better results than relying solely on daily charts for trading.
Conclusion
Trading is not easy; it requires time and patience. However, as long as you manage your risks well, small funds also have the opportunity to gradually grow into large amounts.
In trading, always try to break out of the inherent thinking framework, maintain patience in execution, and develop a comprehensive trading plan.