While fighting a group of monsters and low on health, run away and heal yourself. Buy bottles of hornets, then go back to the monsters. They will still have the same amount of health as they did when you fought them. Unleash your hornets and let them kill your enemies for you. This trick will not work if you are unable to leave the place and find a shop. The easiest way to get your hornets to attack the monsters is to get near them and run around while dodging them. Your hornets will attack any monster near you.
How to find the first sword upgrade
First, go into the dragons cave and when you have got to the dragon, he'll start to atack you. Get to the dragons end and you'll see some gates. When you get to the gates you'll see another sword. Actavate 2 cats around the cave. You'll be on some great times with that sword!