Understanding Ethereum's Basics | A Guide to 5 Key Concepts

Signals, setups and risk math you can use

Example

Ethereum’s decentralized finance (DeFi) sector has seen significant growth, with platforms like Aave allowing users to borrow and lend cryptocurrencies without intermediaries. This democratizes financial services by providing access to loans and other financial tools that were previously only available through traditional banks.

Question

How does Ethereum differ from Bitcoin?

Ethereum focuses on enabling smart contracts and decentralized applications, whereas Bitcoin is primarily designed as a digital currency for peer-to-peer transactions. While both are built on blockchain technology, their primary goals are different, making Ethereum more versatile for building complex financial systems and applications.

Risk management you can actually use

• Risk per trade = account equity × risk% (e.g., 1%).
• Position size = risk per trade ÷ (entry − stop).
• Expectancy (E) = win_rate × avg_win − (1−win_rate) × avg_loss.
• Cap total portfolio risk; journal every trade.

A quick example

Account $10,000, risk 1% → $100 risk per trade. Entry $50, stop $48 → $2 risk/share → 50 shares. Target $54 (2R). If stopped, −$100; if target hits, +$200 (before costs).

How much capital do I need to start?

Use an amount you can afford to lose while learning a repeatable process.

How do I size positions?

Decide a fixed risk % per trade, then divide by the price distance to your stop.

How often should I review?

Match your timeframe: DAIly/weekly for swing; weekly/monthly for long-term.

What goes into my journal?

Thesis, entry/exit, risk (R), emotions, result, next improvement.

Sources & Signals (add before publish)

• Earnings or guidance: …
• MaCRO data or policy: …
• Sector flows: …
• Unusual volume/price action: …