The key steps to create a solid trading plan includes :

1. Define your goals 

Start by setting clear and realistic objectives for your trading activities. Are you looking to generate income, build wealth overtime or simply learn about the market? The goal shapes the strategy. 

2.Assess risk tolerance 

Understand how much risk you're comfortable with and what level of drawdown (loss) you can handle without getting emotional or making impulsive decisions. 

3. Choose a strategy 

Decide on a specific approach to trading - whether it's day trading, swing trading, trend following etc based on goals and risks 

4. Set entry and exit rules 

Establish clear criteria for when to enter trades e.g technical indicators like moving average crossing and when to exit them e. g profit targets or stop-loss orders. 

5.Manage position sizing 

Determine how much capital you'll allocate per trade based on the potential reward to risk ratio while considering overall portfolio diversification. 

6. Review regularly 

Regularly review your plans effectiveness against actual results make adjustments as needed based on changing market conditions or personal circumstances. 

7. Stay displined 

Stick to your plan regardless of short-term market fluctuations avoid impulsive decisions driven by emotions like fear and greed. 

8. Keep records 

Track all trades meticulously in order to analyze performance over time and identify areas of improvement. 

Best strategies to assess risks when trading cryptocurrency 

a. Diversification 

Spread your investments across different cryptocurrencies to reduce the impact of a single assets volatility on your portfolio. 

b. Research and analysis 

Thoroughly research the technology team, market trends and potential use cases of cryptocurrency before investing. Fundamental analysis can help identify strong projects with long term potential. 

c. Technical analysis 

Use charts and technical indicators to identify entry and exit points based on historical price movements. 

d. Risk management 

Set stop-loss orders to limit potential losses, never invest more than you can afford to lose and consider using position sizing techniques such as the Kelly criterion to manage the risk effectively. 

What are position sizing techniques

Position sizing techniques are methods used by traders to determine the appropriate amount of capital to allocate to a particular trade or investment. 

Proper position sizing is crucial for managing risk and maximizing potential returns. 

Position sizing techniques 

- Fixed dollar amount - this technique involves allocating a fixed dollar amount such as $1000 to each trade regardless of the crypto price or volatility. 

-Percentage risk model- Traders calculate their maximum acceptable loss on a trade e. g 2% of total trading capital. And then determine the position size based on the risk threshold. 

-Volatility based sizing - Trader  adjust their positions sizes based on the historical volatility of an asset, aiming for consistent risk exposure across different market conditions. 

-Kelly criterion - This method use complex mathematical formulas to optimize best sizes based on expected return and probability of success. 

-Optimal F model- similar to Kelly criterion, this model considers both expected return and probability but also accounts for transaction costs and other factors that affect profitability. 

e. Stay informed 

Keep up with news and developments in the crypto space as they can significantly impact prices 

f. Understand market sentiment 

Pay attention to social media chatters, forums or sentiment indicators that reflect public opinion about specific cryptocurrencies.