How to Make Money Trading: Process and Calculations

How to make money trading? In active cryptocurrency trading, results come from a repeatable process, not from a single lucky trade. A trader states an idea, sets the entry, the invalidation point and the exit in advance, sizes the position with fees included, executes the plan and records the outcome. A profit is possible only if a series of such trades stays positive after all costs. There are no guarantees here.

Below is the working cycle of one trade and of a series of trades on the cryptocurrency spot market. All prices and amounts in the examples are hypothetical. They are not quotes and not a recommendation to buy any asset. Whether making money is possible at all and how much traders earn per month are outside the scope of this text. Here you will find only the process that lets you measure whether your idea has an edge.

The sequence of steps looks like this.

• Write down the idea and the conditions under which it does not work.
• Set the entry price, the invalidation point and the target before opening a position.
• Calculate the size from the acceptable loss and include fees on both sides.
• Execute the plan without changes on the fly.
• Log the trade in the journal.
• Evaluate a series of trades, and only then change the rules.

Write Down the Trading Idea and Its Limits

A trading idea answers the question of why price is more likely to move one way than the other. A repeatable pattern of such a situation is called a setup. An example of the wording: "price reached a level where a large limit order sits in the order book, selling on the tape (time & sales) slowed down, I expect a bounce". This description has no coin name in it, but it has observable conditions that can be checked on history and in real time.

Every idea has limits. Write them next to the setup description.

• The market and timeframe on which the idea was tested.
• The liquidity at which it applies. If the order book has little liquidity, a large market order will move the price and the calculation will stop adding up.
• The events that cancel it in advance (major news releases, a sharp move in bitcoin, low activity).
• How many trades per day or week the plan allows.

The data for an idea comes from the chart, the order book and the tape. In Secret Terminal these windows can be placed in one workspace. A large limit order (density level) in the order book shows where big resting orders sit, but an order can be pulled at any moment, so one density level alone is not yet a reason to enter. A density map should not be confused with a liquidation map. The first shows placed limit orders, the second estimates the levels where leveraged positions may be force-closed.

The US regulator CFTC, in its customer advisory on the risks of virtual currency trading (published on 15.12.2017), advises people not to use products and strategies they do not understand and to speculate only with money they can afford to lose. Putting the idea in writing works as a simple test of understanding. If the entry condition cannot be described in two or three sentences, it is too early to trade it.

It is convenient to keep setups, risk limits and daily rules in one document. How to put it together is covered in the article "Trader's Trading Plan: How to Build It and Stick to It".

Define the Entry, the Idea Invalidation and the Exit

Three prices are needed before a position is opened.

Entry. The price or the condition at which the trade is opened. A limit order is filled at the set price or better, but it may not be filled at all. A market order is filled immediately, but at whatever prices are in the order book.

Invalidation point. The level at which the idea is considered wrong. It is chosen by the logic of the setup (beyond the level, beyond the large limit order, beyond the local low), not by the amount you "don't mind losing". A stop-loss at this level limits the loss but does not guarantee the execution price. In a sharp move or with low liquidity the order may be filled at a worse price, and this deviation is called slippage.

Exit. The target where the result is locked in (take-profit), or a condition for closing early. For example, the setup did not play out within the allotted time.

The distance from entry to target divided by the distance from entry to stop gives the reward-to-risk ratio, R/R. It is convenient to treat the risk of one trade as a unit, 1R. A target at twice that distance then gives 2R before fees. A high R/R promises nothing by itself. A distant target is reached less often, so the ratio is assessed only together with the share of winning trades.

Calculate the Position and the Costs

Position size is derived from the acceptable loss, not from the desired profit. First you choose the share of the account that can be lost in one trade, then you divide that amount by the loss per coin with fees included.

The formula for a spot buy looks like this.

Size = risk in USDT / ((entry price − stop price) + entry price × fee rate + stop price × fee rate)

A hypothetical case. The account is 1,000 USDT and the risk per trade is 1%, which is 10 USDT. A hypothetical coin, a buy at 2.00 USDT, a stop at 1.96, a target at 2.08. The fee is assumed to be 0.1% per side. This is a training rate, and the real one depends on the exchange, the order type and the account tier.

Without the fee adjustment the result would be 10 / 0.04 = 250 coins, and the loss at the stop would be 10.99 USDT instead of the planned 10.

The size is rounded down to the quantity step set by the exchange. The Binance spot API documentation (checked on 11.11.2026) describes filters for each pair. PRICE_FILTER sets the price step, LOT_SIZE sets the minimum quantity and the quantity step, NOTIONAL sets the minimum order value (price × quantity). The exchange will reject an order that does not pass a filter. The values differ from pair to pair, so they are looked up in the trading rules of the specific venue. In the example the step is assumed to be one coin.

Now two outcomes of the same trade.

After fees the 2 to 1 ratio turned into roughly 1.73 to 1. The breakeven threshold shifted too. With net +17.23 and −9.98, the system breaks even when about 36.7% of trades are winners (9.98 / (9.98 + 17.23)), not 33.3% as in a calculation without costs.

A stop does not lock in the price. If the same position closes at 1.95 instead of 1.96, the price loss will be 11.35 USDT, and about 12.25 USDT with fees. That is why in volatile and illiquid instruments traders allow a margin for slippage or reduce the size.

The position notional here is 454 USDT with an account of 1,000 USDT, and no borrowed funds are used. On futures with leverage the margin (collateral) is smaller than the notional, but the fee and the loss are calculated from the notional, and the funding rate and liquidation risk are added to the costs. Leverage does not change the risk formula and does not replace missing capital.

Execute the Plan and Record the Result

After the calculation, what remains is to place the orders according to the plan. The stop is placed right after the entry, not "when price goes against me". Moving the stop further from the entry, averaging down a losing position and taking profit early without a written condition change the parameters of the trade, and its result no longer says anything about the setup.

Every closed trade goes into the journal. The minimum set consists of eight fields.

The journal can be kept in a spreadsheet, or you can use automatic logging. In Secret Terminal, trades made through connected API keys go into the Trading Journal module, which has a PnL calendar, a cumulative profit chart and a trade card with entry and exit markers on the chart. Automation does not know the setup or the deviations from the plan, so the trader has to keep these fields manually. More on keeping records is in the article "Trader's Trading Journal: Why You Need It and How to Keep One".

Check a Series of Trades, Not a Single Lucky One

One trade proves neither the strength nor the weakness of an idea. A winning entry can be accidental, and a losing one can be executed flawlessly. What gets assessed is expectancy, that is, the average result per trade in a series.

Expectancy = share of winners × average win − share of losers × average loss

Let us take the net results from the case and a hypothetical series of 20 trades. The share of winners in it is set arbitrarily for the sake of arithmetic, and it is not the statistics of any strategy.

One trade out of twenty changed the sign of the result. Two conclusions follow. Twenty trades are too few to tell an edge from chance, and the more observations there are for one setup, the more reliable the estimate. Fees for the series came to roughly 18 USDT, which is comparable to the entire positive total, so counting the result without costs makes no sense.

Several metrics are reviewed in a series.

• The number of trades for each setup separately.
• The share of winning trades, the average net result of a winning and a losing trade.
• Expectancy per trade in USDT and in R.
• The longest run of consecutive losses and the depth of the account drawdown.
• The share of trades with deviations from the plan and their result separately from the rest.

Rules are changed after a series has been evaluated, and one parameter at a time, otherwise it is unclear which change affected the result. A past series does not guarantee a future one. The market changes, and a setup that worked a month ago may stop providing an edge. The answer to the question of how to make money trading eventually comes down to the sign of expectancy after costs over a long enough series.

Which Actions Get in the Way of Evaluating a System

The question of how to make money trading consistently rests on the quality of the data about your own trades. Several habits spoil it.

• Increasing size after a loss. Trades with different risk cannot be compared with each other, and a run of losses at increased size shrinks the account faster.
• Moving the stop and averaging down. The actual loss no longer matches the calculated one, and the 1R value loses its meaning.
• Changing the rules after every trade. The sample for the setup never builds up.
• Tracking without fees and slippage. The result on paper looks better than the real one.
• Mixing setups and markets in one set of statistics. A profitable pattern masks a losing one.
• Treating demo account conclusions as real ones. A simulation does not reproduce the queue in the order book, slippage or the impact of your own order on the price, and it has none of the emotions that arise when real money is at risk. For learning practice, some people use a small real amount within the acceptable loss. In that case you need to check the minimum order size on the exchange and remember that fees take a noticeable share of the result at a small size.
• Trading on someone else's signals without recording the conditions. It is impossible to tell what exactly worked.

Making money from trading as a beginner starts with the discipline of record keeping, not with the search for a "profitable coin". The mistakes listed above do not mean an inevitable loss of the account, but each of them takes away the trader's ability to understand whether the system works.

FAQ

• Can you make money without your own system?

  Consistently, that is unlikely. Individual winning trades happen without rules too, but without written entry, invalidation and exit conditions you cannot tell an edge from luck or repeat the result. The system does not have to be your own invention. Someone else's approach is fine if its rules are clear, tested on your own series of trades and suited to your account size and screen time.

• Why shouldn't you increase risk after a loss?

  Because a loss does not raise the probability of a profit in the next trade, while a larger size makes the next mistake more expensive. The arithmetic of recovery also argues against this step. After losing 10% of the account you need +11.1% to get back to the starting amount, and after losing 50% you need +100%. Risk per trade is revised according to the rules of the plan and the results of a series, not under the influence of the latest outcome.

• What counts as net profit?

  The amount left after all costs for the period. Entry and exit fees, slippage losses, the funding rate on futures positions and withdrawal costs are subtracted from the price result. It is too early to count the unrealized result on open positions as profit. Tax obligations depend on the country of residence and should be checked against local rules.

• What data do you need to test an idea?

  You need records of a series of trades on one setup with the same rules. For each trade, record the planned and actual entry and exit prices, the size, the fees, the reason for closing and the market conditions (liquidity in the order book, activity on the tape, time of day). That is enough to calculate the share of winning trades, the averages and the expectancy. The fewer trades in the sample, the more cautious the conclusions.

To look more closely at limit orders, liquidity and choosing an entry point, watch the free lesson on the Secret Terminal YouTube channel and the terminal's materials on working with the order book and the journal.