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Crypto Trading

Putting it All Together: A Crypto Trade Example

3 min readLesson 8 of 8
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Learning Objectives

  1. 1Synthesize fundamental analysis, technical analysis, risk management, and journaling into a complete trade example
  2. 2Understand how to create a trade plan with defined entry zones, stop losses, and take-profit targets
  3. 3Calculate reward-to-risk ratios to assess whether a trade is worth taking
  4. 4Apply scaling techniques to improve average entry price and manage risk across multiple entries

Bringing It All Together: Building a Crypto Trading Strategy

In previous lessons, you've learned how to put together a discretionary crypto trading strategy. Let's quickly recap:

  • Fundamental Analysis: You learned how to research a cryptocurrency, form a directional bias (bullish or bearish), and come up with trade ideas (going long or short).
  • Technical Analysis (TA) and Price Action (PA): You discovered how to identify entry and exit points based on charts and price behavior.
  • Risk Management: You explored key principles that help protect your trading capital.
  • Trade Journaling: You now understand the importance of tracking your trades and reviewing them to improve over time.

Now, let's put it all together using a simple example featuring our fictional crypto, Poopoocoin (PPC).

Trade Idea Example

Let's say you've researched the market and found that overall investor sentiment is "risk-on" due to improving global economic conditions. On top of that, large institutions are starting to invest in the crypto space and adopt blockchain technologies.

In your research, PPC stands out as a promising asset. It's the native token of a fast-growing blockchain network, and it's gaining attention from institutions planning to integrate it into financial services.

All signs point to strong fundamentals—so you're bullish on PPC and planning to go long.

Chart Analysis: Where to Buy?

Looking at PPC's price chart, the token recently fell from a $90 high back to around $40. This $30-$50 range has acted as a past consolidation zone, suggesting potential support if buyers return.

However, if the price breaks below $30, it may signal continued bearish momentum. So, your potential entry zone is around $30-$40, with trade invalidation below $30.

Your take-profit zone could be around $90, where resistance formed during the last uptrend.

Creating the Trade Plan

Imagine you have a $600 crypto trading account and expect PPC to rise over the next 6-12 months. This makes it a position trade (longer-term hold).

You decide to risk 5% of your capital, which is $30.

Your plan:

  • Buy 1 PPC at $40
  • Buy 1 PPC at $30
  • Set a stop loss at $20 for both entries
  • If both entries are triggered, your total risk is $30:
    • ($40-$20 = $20 risk) + ($30-$20 = $10 risk) = $30

Your average entry price is $35. If PPC returns to $90, your potential profit is:

  • ($90-$35 = $55) x 2 units = $110 gain

That's a reward-to-risk ratio (RRR) of:

  • $110 reward / $30 risk = 3.67:1

Is the Trade Worth Taking?

With a strong RRR and solid fundamentals, this trade idea looks attractive and could be worth executing now rather than just watching.

Of course, in a real scenario, you'd also consider:

  • Alternative market outcomes
  • Unexpected news
  • Advanced trade management techniques like scaling in/out or adjusting stop losses

But this simple example gives you a good idea of how everything ties together—and what to document in your trading journal.

Final Thoughts: Wrapping Up the Beginner's Guide

That's it for this beginner's guide to crypto trading. Hopefully, you now have a clear view of what it takes to build and execute a solid trading strategy.

If you've decided this path isn't for you—no worries. Crypto trading isn't for everyone.

But if you're excited by the challenge, eager to improve, and determined to grow—then go for it.

Just remember:

  • You don't need to take big risks to succeed.
  • Start small.
  • Be consistent.
  • Focus on learning and improving every day.

It's not about quick riches—it's about playing the long game and building wealth over time.

Key Takeaways

  1. 1A complete trading strategy combines fundamental analysis (trade idea), technical analysis (entry/exit levels), risk management (position sizing), and trade journaling
  2. 2The example trade uses scaling with two entries at different price levels to improve the average entry price and control total risk
  3. 3Reward-to-risk ratio (RRR) measures potential profit against potential loss — a ratio above 2:1 is generally considered attractive
  4. 4Always define your trade invalidation point (stop loss) before entering, and document everything in your trading journal
  5. 5Trading success is about consistency, discipline, and playing the long game rather than chasing quick riches

Knowledge Check

1. What is a reward-to-risk ratio (RRR), and what ratio is generally considered attractive?

Previous LessonWhat is a Crypto Trading Journal and Why You Need ItLevel OverviewBack to LevelLevel 7: Tide Strategist