Original author: @btc100w100w
Original source: Twitter
Note: The original article is from @btc100w100w’s long tweet.
I’m preparing to write 2-3 issues, and this is the first one. How can small capital create greater returns in a bull market?
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Currently, I still recommend short-term trading as much as possible during this period, taking profits and controlling the amount of capital.
The key point is to discuss the layout for the next bull market.
In this industry, we all know that bull and bear markets have cycles, and in each round of the market, very few people actually make big money. This is because people are impulsive, their knowledge is limited, and the size of their capital is different, which also determines that each person’s upper limit of gameplay is different.
Today, let’s briefly discuss how to scientifically allocate funds according to different sizes of capital in the new bull market to maximize profits!
1. First, let’s talk about small capital, which is a moderate value (30,000 – 80,000 RMB) (this is also a class that I want to emphasize). Because a large part of the market is still in this stage.
Newcomers, after entering the industry, often rush in and frequently chase highs and sell lows. They regret their actions only after losing their principal. They rush into a coin because someone says it’s good, and then sell it when they hear it’s going to drop. After several consecutive operations, they lose half of their money. It’s a scam.
In this market, the best path for newcomers is to accumulate coins in a bear market. In a bull market, what you need to do is hold on to your beliefs and not sell until the expected value you set is reached, and then sell in batches.
Because the funds are limited, we all know that mainstream coins like BTC and ETH have already passed the stage of undervaluation and are not very friendly to small capital. If you want to make big profits with small capital, it is difficult to do so with mainstream coins. Looking back at previous market trends, the increase in mainstream coins during each bull market was about 8-10 times. And the cycle is relatively long.
Now let’s get to the point.
① For small capital, my suggestion is: allocate 60% of the funds to select 2-3 sectors and buy one coin in each sector on a regular basis. It doesn’t have to be a leading coin, but before buying, you must carefully research the project’s endorsement and the reasons why you personally believe in this project or the track it is in, and judge whether the price and market value are undervalued. It is best not to buy coins with very low trading volume or very old project teams. The market value should be between 80-200.
Platform coins can also be included, but they should be allocated appropriately. (Reason: For beginners, especially in short-term trading, the technical requirements are high and it is easy to be cut back and forth in a bear market. It is important to hold coins with peace of mind. This is your entry ticket in the future bull market because uncertain price trends can be managed through regular investment, thereby spreading the cost. And coins with a market value between 80-200 belong to the mid-range of altcoins, which are more likely to have outbreaks of high-quality projects and a huge increase in valuation during a bull market, thus maximizing returns with small capital.)
It’s important to find a good entry point.
② Take out another 15%-20% to buy meme coins such as Dogecoin, Shiba Inu, Pepe, Doge, etc. Choose those with good selection mechanisms, active projects, listed on OKEx or Binance, as they are less likely to exit scam. Bet on 2-3 of them. If one of them gets popular in a bull market, it can easily multiply by 100 times, like winning a lottery.
③ Keep the remaining 20% as activity funds. As we all know, every bull market will have new narrative hotspots to drive the market. There will be many high-quality coins, even those that can enter the top 10 in terms of market capitalization. Keep this 20% of funds for when trend narratives emerge, to bet on new coins or to gradually increase positions in coins that you believe in at the bottom.
(This kind of fund allocation is neither too scattered nor too concentrated. With a small amount of funds, as long as the altcoin you bet on in a bull market is not too trashy and has a rise of 10-15 times, hitting a medium-quality altcoin can bring a rise of 30-50 times. If you are lucky enough to hit a rising star, the rise could be even greater.
If you buy an altcoin that quickly pumps in the early stage of a bull market, belonging to the first batch, you can decide based on the situation. Take out the principal after doubling or multiplying several times and invest it in the next one. By continuously rolling over spot positions without holding any principal, you can maximize profits quickly. Remember not to play with large funds in contracts, especially for newbies, as it is the fastest way to lose money!!)
By the way, in a bull market, remember, gradually withdraw your profits. Otherwise, a big waterfall could wipe out all your profits and even cause losses.