She couldn't even tell, holding 1500 dollars and asking me, 'Can I invest 800 dollars to test the waters first?' I directly told her no; it's not that I don't allow her to invest, but I'm afraid she'll turn 'testing the waters' into 'diving'.
I asked her to split the 1500 dollars into three parts; this is what I've always referred to as the 'funding iron triangle principle', which is also the core of how I didn't lose my initial 7000 dollars but instead achieved financial freedom back then:
First position: 500 dollars in the 'daily pocket money account', only for intraday trading. Don't think about making 'big money' with this account; just aim for small fluctuations of 1-2% each day — for example, if a certain currency reaches a preset support level in the morning, place an order to earn 10 dollars and then close the software, definitely do not be greedy. I often tell my students: 'This account is for you to practice, not for you to 'linger until dark' in the market — last year, there was a guy who didn't listen to my advice and chased the market, losing 300 dollars in a week. Later, when he followed my rules, he was able to steadily earn 200-300 dollars each month.'
The second strategy: Use $500 for a "patient swing trading position," holding it inactive for ten days to two weeks at a time. The crypto market spends 80% of its time trading sideways; making random moves during this time is just throwing money away. My own swing trading positions have ranged from a minimum of 12 days to a maximum of 2 months. I always wait until the trend is "clearly obvious" before entering the market: for example, if a coin breaks out of its sideways range and doesn't fall back for 3 days, I slowly build a position, taking profits at 15-20%, never waiting for "a little more rise." Remember: expert traders don't make money every day, but one profit is worth ten times what others make—one of my students used this strategy and made $1200 in one trade last year, equivalent to three months' salary at a bubble tea shop.
The third corner: A $500 "lifeline position," held absolutely. This position isn't for averaging down; it's your backup plan in case the first two positions go wrong. I've seen too many people invest all their money, only to have their accounts wiped out the moment they make a wrong judgment, then come crying to me for "recovery techniques"—but without even a $100 safety net, nothing can save them. My own backup position has only been touched once in five years: during the market crash of 2022, my first two positions lost 10%. I didn't panic and average down; instead, I waited for the price to drop to a key level, then used my backup position to buy at a low price, recovering the losses in three months.
Besides position sizing, I also have a "robotic trading rule," which is key to controlling emotions—after all, people tend to make reckless moves when they panic:
A stop-loss order should be set at 2%; you must cut your losses when that point is reached. Last year, a student was trading with me. A certain cryptocurrency dropped to his stop-loss level, but he was reluctant to sell, saying, "I'll wait, it might rebound." He held on for half a day, losing 15% before finally cutting his losses. Later, he complained to me, "I got carried away and forgot the rules." I told him directly, "A stop-loss isn't 'accepting a loss,' it's like installing an 'airbag' for your account—if you're reluctant to cut your losses by 2% today, you might have to cut 20% tomorrow, or even wipe out your entire account."
Lock in half of your profits when they reach 4%. For example, if you use $500 for day trading and make $20, withdraw $10 first—don't think "this small amount is unnecessary." Not only do small profits add up, but they also prevent you from losing them all back. One of my students used this method and locked in $800 in profits last year alone, more than her initial investment.
There's another hard and fast rule: never add to your position when you're losing money. Many people, after losing 10%, think about "investing more money to lower the average price," only to sink deeper and deeper—the most outrageous case I've seen is someone adding to their position from $500 to $2000, ending up with only $300 left in their account. Remember: the market won't rise just because you "want to recoup your losses"; instead, it will trap you even more if you "get impatient."
Actually, having a small initial investment isn't scary; what's scary is having a few thousand dollars and thinking you can "get rich quick." That bubble tea shop girl was panicked at first too. She'd ask me if she should sell when the price went up by $50, and wonder if she should cut her losses when it dropped by $20. But after following my rules and holding on for three months, when her account reached $28,000, she told me, "Now even if it drops by $100, I can sleep soundly."
People still ask me, "Can you teach me the technique to 'double your money quickly'?" I always laugh and say, "Learn how to 'not lose' before you talk about 'making money'. If you can't even split your $1,000 into smaller positions or draw a stop-loss line, even if you get lucky and make money once, you'll lose all your principal next time."
