How to trade and earn money?

Theory

Before diving into trading, it's important to understand the basics so you know what you're dealing with and how everything works. Trading involves analyzing markets, managing risks, and making informed decisions about when to enter or exit positions.

Concepts to get you started:

• Market Order: Executes immediately at the current price.
• Limit Order: Executes only at a price you set (or better).
• Leverage: Allows you to trade larger positions with less capital, but it increases both potential profit and risk.
• Take-Profit (TP): Automatically closes a trade when a target profit is reached.
• Stop-Loss (SL): Automatically closes a trade to limit losses when the market moves against you.
• Margin: The funds you use to open a leveraged trade.

Types of Markets

• Spot Market: Real-time buying or selling of assets at their current price.
• Futures Market: Agreements to buy or sell an asset at a specific price in the future, often with leverage.

Risk Management

• Never trade more than you can afford to lose.
• Always set Stop-Loss and Take-Profit levels.
• Use leverage carefully—high leverage can amplify both profits and losses.

Glossary

• Spot deal - it’s a type of trading where assets are bought or sold on the spot, right here and now. In our case, we’re talking about cryptocurrencies.
• Futures deals - this is when a trader (or broker) agrees to buy or sell an asset at a set price on a specific date in the future. With futures, you can bet on market movements to make a profit by opening long or short positions using a futures contract.
• Long deal (betting the price will go up) - here, the trader signs a futures contract agreeing to buy an asset at a certain price, expecting to sell it later at a higher price when the deal closes.
• Short deal (betting the price will go down) - in this case, the trader signs a futures contract with the exchange, agreeing to sell an asset at the current price. When the deal closes, they’ll buy it back at the (hopefully lower) closing price to pocket the difference as profit.
• Leverage - when trading crypto, leverage is like borrowing extra cash to increase your buying or selling power. It lets you trade much bigger amounts than you actually own. Even if your starting capital is small, you can use it as collateral to make bigger moves. But watch out—leverage can boost your potential gains and your chances of losing everything, especially in the wild world of crypto.
• Liquidation - this is the price level where the exchange automatically closes your position because your losses have eaten up your entire futures balance. Ouch.

Where to Start?

First, you’ll need to sign up with a crypto exchange that works best for you. Out of all the options, I’d recommend just two: Binance and ByBit. These are currently the biggest exchanges out there. Personally, I trade on ByBit, andall the examples i’ll share gonna from ByBit.

Head over to ByBit and create an account. Make sure to download their app for easy access. Here’s a link to sign up, download the app, and snag $100 in bonuses, plus discounts on fees and monthly rewards:

Open the App

Once you’ve installed it, fire up the app, and you’re ready to dive in!

The exchange app is packed with tools and features, but for now, you only need to focus on Trade - Futures this is where futures trading happens.

At first glance, it might seem overwhelming and confusing, but trust me, it’s simpler than it looks. Let’s break it down

Adjust Leverage

When you crank up leverage, you’re basically multiplying your buying power. For example:

• Using 20x leverage, you can open a $200 trade while only using $10 of your own money (because $10 × 20 = $200).

Leverage and Profit/Loss

Leverage doesn’t just boost your trade size—it also amplifies your potential gains and losses. Here’s how it works:

• Without leverage: If the asset moves up or down by 100%, you’d either double your money or lose everything.
• With 20x leverage: Every 1% movement in the asset’s price equals a 20% profit or loss.
• So, to make a 100% profit, you only need a 5% price move in your favor.
• ⚠️ But remember: the same math applies to losses.

Leverage Costs

Using leverage comes with fees. You’ll pay commissions based on your trade size. However, you can reduce these fees by signing up through the official ByBit link, which also gives you bonuses and discounts:

How to Calculate Profit/Loss with Leverage

If you were trading without leverage, you’d need a 100% price move (up or down) to double your money or lose everything. With leverage, the game changes:

• 20x leverage: Each 1% price change in the asset equals a 20% profit or loss on your position.
• So, to make a 100% profit, you only need a 5% price move in your favor.
• Note: The flipside is true too—small price moves against you can wipe you out quickly.

Margin Types

You also need to choose your margin mode:

• Cross Margin: All your positions across different assets share the same margin pool. Losses from one trade can pull from the total balance.
• Risk: If liquidated, all trades close, and your balance hits zero.
• Isolated Margin: Each trade has its own margin. Losses are limited to the funds allocated for that specific trade.
• Benefit: If a trade hits liquidation, only that trade closes, leaving your other positions untouched.

Choosing Crypto Trading Pairs

In the app, there’s a section for selecting trading pairs. Examples include:

• BTC/USDT (Bitcoin/US Dollar Tether)
• ETH/USDT (Ethereum/US Dollar Tether)
• SOL/USDT (Solana/US Dollar Tether)

You’ll find plenty of options depending on what you want to trade.

Going Long or Short

Here, you decide the direction of your trade:

• Long: Bet that the price will go up.
• Short: Bet that the price will go down.

Click Buy for a long position or Sell for a short position.

How to Enter a Trade

When entering a trade, you also need to decide how it’ll open:

• Market Order: Instant trade at the current market price.
• Limit Order: You set a specific price at which you want the trade to open. The trade will only execute if the asset hits your chosen price.

These are the two most practical ways to open trades - i'm rarely use anything else. Everything else is mostly unnecessary.