Small funds making a comeback in the crypto market: the “profit compounding method” is a viable path. But very few people can actually pull it off, because most get the first step wrong.

**First, the prerequisites**

Don’t play this game with money you can’t afford to lose. The ideal scenario: you already have some realized profits. For example, you made 50,000 yuan through spot or futures trading—use that as your compounding principal, and your psychological pressure will be much lower. Why? Because even if you lose, it’s “losing money you’ve already earned,” not eating into your original capital.

**What’s the trading logic?**

Let’s use BTC as an example. When the price is around $100,000, you choose 10x leverage, but only use 10% of your total funds as margin to open the position. In reality, your actual leverage is just a bit over 1x.

Here’s the key: set your stop-loss in advance, say at 2%. If your stop is hit, your actual loss is about 1,000 yuan. Even if your position gets stopped out, it’s not a devastating blow.

If your directional bet is correct and the price rises to $110,000, you then add a second position using 10% of your floating profit, and set the stop-loss again. Even if the second position is stopped out, the floating profit from the first position remains, so your overall account is still in profit.

This is the underlying logic of “using profit to roll profit”—every time you increase your position, you’re using already-earned money to bet for a bigger gain, not endlessly adding new capital and taking on reckless risk.

**The risk is actually controllable**

A lot of people think compounding = high risk, but that’s a misunderstanding. You don’t need high leverage; 2-3x is plenty. The key is to gradually increase position size with floating profits, not go all-in from the start.

For major coins like BTC, where volatility is relatively moderate, time is often on your side. As long as your general direction is right, holding patiently usually works better than frequent trading.

**Not every market is suitable for action**

Only high-certainty opportunities are worth compounding:
- Sideways consolidation after a deep pullback
- Strong breakout after multiple tests of key support levels
- Clear trends with confirming volume

These are the times when your success rate goes up significantly. If the market is unclear, it’s better to stay out.

**One last truth**

Compounding can help small funds grow, but only if you can resist temptation, wait for the right opportunity, and stick to discipline.

Among those who fall in the market, nine out of ten don’t lose because of poor methods, but because of impatience and greed.

Surviving is always more important than making quick money. Manage your positions well and get your timing right, and you’ll have a real chance to grow from a small account to a big one.