I’ve seen too many people rush into the crypto space with a few thousand dollars, fantasizing about a 100-fold return in a year, only to lose everything in three months; I’ve also seen others slowly grow $5000 into a lot more over 5 years. Today, I don’t want to talk about myths, but rather share my practical experience from going from 'a meal's worth of money' to 'financial freedom'. For small funds to survive and break through in the crypto space, it’s never about luck, but these few counterintuitive strategies.

First, let’s talk about the pitfalls small funds easily fall into: always wanting to 'bet it all to recover losses'. When I first entered the market with $3000, I heard someone say 'a certain altcoin can rise 10 times', so I immediately went all in. The result was a 40% drop in three days, and I panicked, cutting my losses overnight; the remaining money was not even enough to buy a pizza. I later understood that the key for small funds is 'survival', and the core of survival is capital management.

My current capital allocation method is a 'life-saving talisman': divide the money into 5 equal parts, and only move one part each time. For example, if there’s a total of $10,000, I’ll spend at most $2000 on each trade. More importantly, if a single loss reaches 10%, I must cut it off, with a maximum loss of $200. Even if I make five mistakes in a row, the total capital will only lose half.

But as long as you seize an opportunity to earn 30%, $2000 can turn into $2600. After a few times, you can cover losses and make a profit. Last year, using this strategy for swing trading, despite ETH's volatility, my account never showed a daily loss of more than 5%.

If small funds want to make big money, they also need to understand 'borrowing momentum'. Don’t think about bottom fishing in a bear market; the 'low price' at that time may just be the beginning of a decline; real opportunities come during bull market pullbacks, just like waves retreating during high tide, which will rise even higher. In the bull market of 2021, I specifically waited to buy Bitcoin when it pulled back 15%, and each time I could catch a wave to earn money. In contrast, those who 'bottom fished' during the bear market had little capital to start with, and once trapped, they didn’t even have money to average down, just watching the bull market come and go.

When selecting coins, you need to be more discerning. Coins that rise 50% in a day are like fireworks at a night market; they look lively but extinguish quickly. Small funds cannot withstand such volatility; it’s best to choose mainstream coins that 'rise steadily and fall gently'. I was often tempted by altcoins in my early days, but later realized: when Bitcoin rises 10%, mainstream coins can at least rise 5%; but when altcoins drop 20%, mainstream coins might only drop 5%. For small funds, stability is more important than speed.

Let's talk about the 'moving average secret' in technical indicators. Many newcomers only look at 'golden cross buy, death cross sell', and end up losing money. In fact, the real use of moving averages is to help you judge trends and find opportunities.

I currently use three moving averages: 20EMA for short-term trends, 50EMA for medium-term, and 200EMA for long-term. In a bear market, if the price is hovering below 200EMA, don’t believe any crossover between 20EMA and 50EMA; in a bull market pullback, if the price stabilizes around 50EMA, it’s often a good opportunity to enter; if the price keeps stepping up on 20EMA, it indicates a strong trend, so don’t exit easily.

For example, last year: ETH rose from $1200 to $2000, and during the pullback to $1600, it coincided with the 50EMA support level. I bought 1.25 at $2000, and later sold at $1900, making a net profit of $375. For small funds, that’s equivalent to an 18% increase in principal. Those who only look at golden and death crosses might have panicked and sold at $1700, earning half as much.

The key for small funds to break through also lies in the 'three axes' to combat emotions:

First, enter the market only when there is 'volume'. Trading volume is like the 'ECG' of coin prices; coins without volume are like deflated balls and cannot rise. I now check the trading volume on the K-line first. I will only consider entering after three consecutive days of increasing volume; I won't touch coins that are declining on low volume, no matter how cheap they are.

Second, write down your buy and sell points in advance; don’t make decisions on the fly. Before each purchase, I always write in my notebook: 'Buy X coin, price XX, stop loss XX, take profit XX', and then pin it on my screen. When I bought SOL last year, I set a stop loss line in advance, and when it really dropped to that price, though it hurt, I still cut my losses, avoiding greater losses.

Third, learn to 'endure' and 'let go'. Don’t panic during floating losses; as long as the trend hasn’t broken, just hold on — I once held onto a coin for three months, with a 20% floating loss, and ended up making 50%. Don’t chase during missed opportunities; money that doesn’t belong to your understanding will just be lost back.

Finally, I want to say that the biggest advantage of small funds in the crypto space is not flexibility, but rather 'low cost of trial and error'. Losing $5000 can be reset, but if you can learn something from each loss, that money is not a cost but tuition. I’ve seen the most impressive retail investors turn $8000 over three years into $600,000. Their secret is: 'Only earn a little each time, and accumulate slowly.'