I often get private messages asking me the same question: What exactly are those traders who make 100x returns in a year doing right? Why is it that, despite learning technical analysis and watching candlestick charts, I always end up getting liquidated?

After watching the market for so many years, I’ve seen too many people overcomplicate simple things. The truth is, those who make big money only focus on two things—**spotting the trend and managing their position size**. But most people only learn the superficial stuff.

The “compounding position” strategy is indeed the fastest way to amplify returns in crypto, but it also comes with the fiercest risks. The real secret to making money isn’t staring at the screen all day and trading frequently, but waiting for a clear trend, then using compounding to multiply your profits.

Today, I’ll break down the compounding strategy I’ve used for a long time. If you master this logic in a bull market, you really have a chance at a different outcome.

## The Essence of Compounding: Let Profits Run, Never Risk Your Principal

When most people hear “compounding positions,” their first reaction is to mindlessly add to their position or go all in. That’s wrong! This isn’t gambling—it’s using your unrealized profits as ammo, and the stronger the trend, the bolder you get.

How do you actually do it? Let’s say you have $100,000 in your account—never go all in at once. My habit is to **start with 20%**, which means putting $20,000 in as a test. When the coin price rises 10%-20%, use the profits to add to your position—if you made $2,000, use that $2,000 to buy a bit more.

Here’s the key: **Never touch your principal, only use your profits to compound**. Even if the trend suddenly reverses, the only thing you lose is your unrealized gains—your principal is still intact. That’s the real safety net of compounding.

Most people lose money because they have it backwards—they add to losing positions, digging themselves deeper until they’re completely stuck. When they’re making money, they’re too scared to add, and miss out on the main rally.

## Not Every Market Is Right for Compounding—You Need Three Conditions

Don’t start compounding just because the price is up a little. You must meet these three conditions:

1. **Strong Uptrend** — The candlestick is consistently above the moving average, with healthy price and volume action. It’s not a fake breakout after a slow decline.
2. **Hot Market Sentiment** — The community is buzzing, there’s clear capital inflow, and the news cycle is building momentum.
3. **Strong Hands Controlling the Coin** — The price action shows clear support from major players, not just retail-driven pump-and-dumps.

If the trend starts to weaken, or any of the three conditions aren’t met, stop immediately! Keeping your profits is even more important than making money.

## Practical Strategy: How to Enter, Add, and Exit

Here’s the actionable part.

**How to Enter the First Position:**
Wait for the price to break a previous high, then open a 20% position to test the waters. The trend has just been confirmed—don’t rush in full force, just dip your toes in.

**How to Compound:**
When the price is up 20%, use the profits to add another 10% position; if it rises another 30%, keep compounding with your unrealized gains. Remember, every time you add to your position, the money comes from the previous profit.

**When to Exit:**
If there’s heavy volume but the price stalls (a sign of exhaustion), or if it drops below the 5-day moving average, close out everything immediately. Don’t hesitate for even a second.

With this approach, if you catch the right trend, making 3-5x returns is totally possible.

## Take-Profit Techniques: Capture the Main Rally Without Giving Profits Back

Compounding can make you money, but keeping your profits is even more important. I use two methods together:

**Trailing Stop-Loss** — For every 10% gain, move your stop-loss up by 5%. For example, if you enter at $100 and it goes to $110, set your stop at $105; if it reaches $120, move the stop to $115. This gives the price room to run but locks in most of your gains.

**Partial Take-Profit** — When you hit a key resistance (like a previous heavy supply area or a round number), sell part of your position. Hold onto the rest—if the price breaks through, you can catch the next leg up; if not and it falls back, at least you’ve pocketed some gains.

Using both together lets you capture the main rally without giving all your profits back at the top.

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Most people aren’t slow—they’re just stumbling in the dark. If you’re heading in the wrong direction, no amount of effort will get you anywhere. Understanding the trend, managing your position size, and holding onto your profits—that’s the real turning point from losing to winning.