Original author: adam
Compiled by: TechFlow
Reprinted: Luke, Mars Finance
Before diving into the topic, please remember that trading is a complex and high-risk activity.
There is no method that allows you to rapidly grow your account in a short time without experiencing any losses.
In fact, those who can rapidly grow their accounts often do so by taking on significant risks, sometimes nearly going all in.
The focus of this article is not to tell you to patiently wait for ideal market conditions, nor 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 basic concepts such as 'risk management', I strongly 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 mainly trade large markets like BTC, ES (S&P 500 futures), major currency pairs, or gold,
You will be directly competing with retail traders like yourself, as well as large institutional players, quant firms, and more.
This is mainly because these markets have extremely high liquidity, allowing large players to easily participate in competition.
While trading these markets is not impossible, if you do not have sufficient capital, you will actually have 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 lack the liquidity to meet their trading scale demands.
When I began to delve deeper into the altcoin market, I often found the clearest trading signals in markets with lower liquidity.
Initially, I was very confident in these 'low barrier' markets, but when I tried to execute large positions, I found my orders stood out extremely on the order book, which made me realize the disadvantages of inadequate liquidity.
However, for traders with small accounts, this issue does not need to be overly concerned about, as liquidity issues will only truly affect you when your order size reaches high five or six figures.
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 may yield 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, 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 result in actual losses far exceeding expectations due to slippage. However, for traders with small accounts, their position sizes are smaller, and stop losses can often be triggered close to ineffective points, thus avoiding this issue.
Low market cap alternatives to derivatives are not the only things you can participate in. On-chain tokens or NFTs are also options.
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 at which information spreads in this field to avoid taking on 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 actual likelihood 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.
Additionally, you will find that using simple support and resistance levels or trading indicators is often enough to handle trades, especially for larger market cap tokens with lower risk of failure.
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.
Additionally, for highly liquid markets, if you are not familiar with them, it can be difficult to discern which specific market it is.
For example, the chart above shows the 5-minute chart of XRP.
If you choose swing trading, the trading frequency will be relatively low. Even if you profit, most of the time you are simply waiting patiently for opportunities, which typically only arise 1-2 times a week in each market.
I will discuss swing trading in detail later, but day trading is different; it provides immediate feedback, with a lot of small fluctuations to operate on each day.
Therefore, if you engage in day trading and execute a small number of trades in each trading session, theoretically, your account capital would grow faster.
However, day trading is one of the most challenging areas of trading. A slight distraction or a small mistake can lead to losing all your profits in just a few minutes, as quickly as you made money.
I recommend every beginner trader try day trading, as it allows you to quickly receive market feedback and accelerates the learning process.
One major advantage of day trading is that you can focus on markets with higher liquidity, which makes trading scalable. If you focus on BTC, ETH, ES, NQ, gold, or major currency pairs, you won't encounter limitations on position sizes.
Nevertheless, day trading is very difficult and not suitable for everyone. It requires multiple skills, including high concentration, quick decision-making, and decisive stop losses.
Therefore, it is very important to develop a detailed trading plan and strategy for each step. Once you enter a trade, emotions may affect your judgment, and this is where your prepared plan will come in handy.
There are many methods for day trading, such as operating through price movements, order flow, news, and technical indicators. 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 Tradingriot Bootcamp, which is a training program designed specifically for traders.
Trading with other people's assets
In recent years, the field of online prop firms has developed rapidly.
If you are new to this type of company, you need to pay an evaluation 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 amounts of capital, and the only cost is paying the evaluation fee.
However, if you are not familiar enough with trading, you may waste funds by frequently paying evaluation fees without ever obtaining a funded account.
Although prop firms often spark controversy, I believe they present a very good opportunity for those with trading skills but lacking capital.
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 nearly impossible rules, or even go bankrupt directly.
High time frame analysis and low time frame execution
If you find day trading unsuitable for you, do not be discouraged. This method can also help you quickly grow your account 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 no longer want to spend a lot of time staring at charts.
Nevertheless, I still want to emphasize that my experience over the past few years in day trading, researching different futures markets, and understanding market microstructures has been very important to me, and I am grateful for these experiences.
While we mentioned that prices have fractal characteristics, the key points on higher time frames like daily, weekly, or monthly often elicit larger market reactions than those on 1-minute charts. 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 rose to a daily resistance level and then fell back 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 within 18 days.
Of course, achieving a 2.5 times return in 18 days is quite impressive. But if your account is small, for instance, with a single trade risk of $100, earning $250 may not be very exciting; in contrast, if the single trade risk is $10,000, earning $25,000 seems very substantial.
If you want to quickly grow your account, you can switch to lower time frames while following high time frame (HTF) trading ideas. This means your goals remain unchanged, but by executing trades on lower time frames (LTF), you can narrow stop loss ranges, thus 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 increase risk-return but also significantly raises the risk of being stopped out before the market takes off.
If you choose the H1/H4 time frame, it may still be difficult to obtain an ideal entry point, or you might get stopped out before the market takes off. However, based on my experience, giving high time frame trading ideas 1-3 attempts in lower time frames 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, even small amounts of capital can gradually grow into larger amounts.
In trading, always try to think outside the box, maintain patience in execution, and develop a comprehensive trading plan.