Before discussing trading skills, it is necessary to clarify one point: trading is essentially a high-risk activity. There is no method that allows you to rapidly grow your account in a short time without facing risks and potential losses. In fact, those who can rapidly grow their accounts usually do so under extremely high risk, even in a near-all-or-nothing situation.
The focus of this article is not to have you patiently wait for ideal market conditions, nor to delve deeply into market analysis techniques. Instead, I will share some methods to help you achieve rapid account growth on the basis of reasonable risk control. If you are not yet familiar with basic concepts such as 'risk management', I suggest you read relevant articles on risk management first to better understand the core of trading.
Why choose to trade in niche markets?
If you primarily trade large markets like BTC, S&P 500 futures (ES), major forex pairs, or gold, you will inevitably compete with other retail traders while also contending with large institutions, quantitative firms, and other big capital players. The reason is simple: these markets have extremely high liquidity, allowing big players to participate easily, thus you will face more competition.
Although trading these markets is not impossible, smaller traders may actually have more advantages in markets with lower liquidity. For example, many altcoin derivatives, NFTs, or on-chain tokens often attract less interest from large players due to insufficient liquidity, as they cannot meet the trading demands of these big players.
When I deeply researched the altcoin market, I often found clearer trading signals in markets with lower liquidity. Initially, I was confident in these 'low-entry' markets, but when I tried to execute large positions, I found my orders stood out in the order book, which made me realize the downsides of insufficient liquidity. However, for small account traders, this liquidity issue usually does not need to be overly concerned until the order size reaches high five or six figures.
Taking Lina on Velo as an example, it can be observed from the chart that potential breakout signals for Lina were already visible a few days before the breakout occurred.
Such opportunities can bring significant gains, but we also need to consider the potential risks.
By analyzing Lina's trading volume and open contract data on the Laevitas platform, we can observe that before the breakout, Lina's daily trading volume was 16 million, and the open contracts were 4.5 million. This indicates a high level of active fund flow and investor interest in the market.
However, if the trade does not go smoothly and you hold large positions, you may face the risk of actual losses exceeding expectations due to slippage. This is because during severe market fluctuations, price jumps may prevent stop-losses from being triggered in time, leading to increased losses.
For small account traders, this situation occurs less frequently because their position sizes are smaller, allowing stop-losses to be triggered near invalid points, thus avoiding significant losses due to market slippage. This enables small account traders to respond more flexibly to market fluctuations and reduce risks.
In addition, low-market-cap alternative derivatives are not the only investment option. On-chain tokens or NFTs can also provide opportunities for investors, especially when these markets have lower liquidity, making it easier for small account traders to find opportunities.
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 now they have faded away.
In on-chain trading, the speed of information dissemination is crucial. Market news changes rapidly, and understanding and grasping the timeliness of this information can help you avoid unnecessary risks while also preventing missed opportunities due to premature selling. Although you may see many success stories in on-chain trading, in reality, situations where '1 SOL' appreciates to '1000' are very rare, and the chances of success are relatively low.
When conducting on-chain trading, there are some unique strategies that can help you improve your chances of success. For example, tracking different wallets and analyzing position distribution can help you understand the movements of large funds in the market. In addition, common sense can also be an effective tool; try to avoid tokens that are heavily promoted by KOLs (Key Opinion Leaders) as they are often subject to over-speculation.
For tokens with larger market caps and lower risks of scams, using simple support and resistance levels or trading indicators is often sufficient to handle market fluctuations. These basic technical analysis tools can help you grasp key trading points, reduce the interference of complex strategies, and ensure that you can operate steadily in high-volatility markets.
Day trading
Prices have fractal characteristics. This means that if I show you a chart, it may be difficult for you to determine whether it is a daily chart, monthly chart, or a 5-minute chart.
In high liquidity markets, if you are not familiar with the market, it may be difficult to clearly identify specific trading opportunities. For example, if you look at the 5-minute chart of XRP, you may find that fluctuations in the market occur quite frequently, but it is hard to judge whether there are worthwhile trading opportunities.
For swing traders, the trading frequency is usually low. These traders often spend most of their time patiently waiting for the best entry points, which may only appear once or twice a week. If you lean towards swing trading, you will focus on capturing larger trend fluctuations, which typically occur less frequently in the market.
In contrast, day trading offers immediate feedback, with numerous small fluctuations available for trading every day. Day trading allows traders to quickly seize short-term fluctuations, so if done correctly, the growth rate of account funds may be faster than that of swing trading. However, day trading is also one of the most challenging areas; a slight distraction or mistake can lead to losing all previous profits in a matter of minutes. Therefore, day traders need to possess quick decision-making and efficient execution abilities, and stop-losses should be decisive.
For beginner traders, I recommend trying day trading. This method can help you quickly receive market feedback and accelerate your learning process. A significant advantage of day trading is that you can focus on highly liquid markets, which have no position size limits, such as BTC, ETH, major forex pairs, etc. The high liquidity of these markets makes it easier for you to enter and exit the market without facing liquidity issues.
However, day trading is not suitable for everyone. It requires a high level of focus, sharp market judgment, quick reactions, and decisive stop-loss decisions. To improve the chances of success, it is crucial to develop a detailed trading plan and strategy. Whenever entering a trade, emotions can affect your judgment, making a pre-prepared trading plan particularly important.
There are many methods for day trading, such as trading based on price trends, order flow, news, technical indicators, etc. Each method has its applicable scenarios, and there is no method that is absolutely superior. Different traders can choose strategies that suit them based on their preferences and market conditions.
Trading using other people's assets
In recent years, the field of online funding companies (prop firms) has developed rapidly.
If you are encountering this type of company for the first time, you need to pay an evaluation fee first and comply with trading rules in a demo account to gain access to the funded account.
This model allows you to trade with larger capital, and the only cost is to pay the evaluation fee.
However, if you are not familiar with trading, you may waste funds by frequently paying evaluation fees without ever obtaining a funded account.
Although funding companies often spark controversy, I believe they offer a great 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 rules that are nearly impossible to pass, and even go bankrupt.
Here I may be somewhat biased because I am directly involved with the Breakout funding company. However, if you focus on cryptocurrency trading, Breakout is a very good choice. It offers daily payment services with no record of payment refusals, and the evaluation rules are also very reasonable.
High time frame analysis with low time frame execution
If you find that day trading is not suitable for you, there is no need to be discouraged. This method can also help you quickly grow your account funds while being easier to operate.
In fact, this approach 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 watching the 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 thankful for having gone through these.
Although we mention that prices have fractal characteristics, the key points in the market at high time frames like daily, weekly, or monthly often generate larger market reactions compared to points on a 1-minute chart. This is because more traders and algorithms pay attention to these key points on high time frames and act accordingly.
For example, at the end of February 2023, Solana rose to a daily resistance level before retreating 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. However, if your account is small, for example, if your risk per trade is $100, then making a return of $250 may not be exciting; in contrast, if your risk per trade is $10,000, then making a return of $25,000 would be very substantial.
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 goals remain unchanged, but by executing trades on lower time frames (LTF), you can narrow the stop-loss range, thereby increasing position size.
You don't need to switch to a 1-minute or 5-minute chart; the H1 or H4 time frame is sufficient. Focusing too much on low time frames may increase risk-return but also significantly raises the risk of being washed out before market movements start.
If you choose the H1/H4 time frame, it is still possible that you may not achieve ideal entry points or get stopped out before the market starts moving. However, in my experience, giving high time frame trading ideas 1-3 attempts on low 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, small funds can gradually grow into large amounts.
In trading, always try to break out of the conventional thinking framework, maintain patience in execution, and formulate a comprehensive trading plan.
