I host dnd for a group of 3 people. 1 problem I have is leveling. My party is lvl 3. I've just been arbitrarily handing out levels. After my party killed a giant spider I gave them 2 levels. I just had them do an arena round style battle where they nearly died twice. I was thinking about taking them to level 5 since it was very difficult. But I'm worried because I heard dnd above 10th level is really hard to balance because the characters are so strong. I'm worried they will get too strong too fast. On the bright side we are all very VERY new( 1st campaign) How do I solve this?

There are two primary ways of levelling - experience points and milestone. With experience points, you tally up the total XP for the monsters the party fights, divide by the number of players in the party, and then they level up when they hit the right experience for the next level (determined by a table in the official rules).  Also, you should award XP for non-combat encounters—though that is a bit harder to gauge since there are not hard and fast rules like there are with combat.

With milestone levelling, you level up the party whenever they finish a major quest or objective.  For example, they might stay the same level the entire time they are fighting against a cult, levelling up when they finally defeat it. Defeating a spider would not be a milestone; and no milestone should ever count for two levels. 

I personally prefer milestone - it makes the level ups feel less arbitrary and tie character growth to key story moments. Plus, having done my share of DMing for experience levelling, I find it to be busywork and prefer not to do it anymore. 

Don't give multiple levels at a time.

There are two main ways of progression.

XP: Each creature that is killed, defeated or otherwise dealt with has an XP value associated with it on the statblock. That gets shared out among the party. Over time it builds up. When they breach each level's threshold, they level up to that level (the PHB has the threshold values, or you can Google it). The threshold gaps get larger the higher the level is.

The other is milestone. You pick certain points in the adventure, and when they reach those points, they level up. Usually, they reach L2 after the first session. The next few levels are after 2 sessions each. The number of sessions per level is higher as the players get higher in level.

Which you do, depends on you. If you have a story planned out, I'd recommend milestone. It gives you a high level of control as to when they go up and allow you to adjust for their story making decisions. XP can get funky - players are encourage to be murder-hobos so they can level up, and progression can be janky.

On the other hand, XP takes the decisions out of your hands. They level up when they level up, which means you're not having to do quite so much planning. If you're just doing random quests, I'd roll with that.

As players level they have more and more things they can do. Level 1 and 2 are designed to bed new players in with simple characters and getting up to level 3 quickly isn't generally a problem but with new players I would let them play a few sessions at each level so they are familiar with all they can do before getting new stuff. 

At high levels it is n9t just balancing but 6ou could find the players cando crazy things like suddenly deciding to teleport somewhere they were at at the start of the cam0aign and as dm you have to deal with it. Also at high levels you need to suspend belief somewhat, it is fine for adventurers to fight goblins wolves and bandits on a regular basis but at high levels the o ly things that challenge them are things that 5hreaten the who world and they should not show up every day. Published campaigns generally end at around level 12 and there is a reason for that.

Milestone is my favorite because you can choose to have your players level up at a point that feels more natural or important. Milestone also lets you better control the point at which your players reach various levels, which is good for campaign planning and ensuring they don't get TPKed without having to adjust encounters or adventures you may have planned for later on.

It is worth noting that, under the XP system, level progression becomes slower as the levels go on. So you might want to make requirements to trigger a level up a bit harder as the players get more powerful if you use milestone. You could also set goals and only have them be quarter level ups or half level ups too.

The DM being chronically unprepared for the amount of nonsense the players can pull is half the fun. You'll be fine.

I definitely support milestone but it always works best when you have some kind of idea of the “chapters” in your game, and where they end.  Typical times a milestone might be reached is when the players 1) kill a Boss or other Significant Character (Monster), 2) Find a Plot / Magical Item, 3) Solve a storyline mystery or big box puzzle, 4) Recruit an Ally, and maybe 5) Clear a dungeon.  These are just some ideas, others might make just as much sense.  If you have trouble with figuring out Chapters for your game, you can always use XP per monster / encounter, and eventually look to graduate to the milestone progression.

Edit: Obviously, it’s a pretty solid idea to purchase some of the better prewritten adventures to see how they do it.

Very glad to see people are using the milestone levelling system, it seems like a big improvement over XP, I am decidedly not a fan of the murder hobo play style, and it’s quite a bit of bookkeeping for the DM. It encourages more diverse ways of solving problems too - a well placed Charm Person or Sleep can often bypass a lot of combat, and XP-oriented players can object to that because they lose out on points.

I think a one-off boost of two levels is not awful, it’s basically the DM correcting a mistake of starting the players off at too squishy a level. But from my experience from long ago, the levels 4 through 12 are the most playable, where you still have to scrounge for resources and creative solutions rather than busting out the high level spells. 

You may level up wht XP or Milestone, but i'd avoid granting more than 1 level at a time it will result in a smoother progression.

Quote from Bodhitre >>

I think a one-off boost of two levels is not awful, it’s basically the DM correcting a mistake of starting the players off at too squishy a level. 

 You're better off just cooling off the encounters a bit. Knock off a creature or two from the combat list or temporarily adding an NPC guide or something. If encounters are too hard, it's often better make the encounters easier than to boost the players. You can't walk back the player power level.

Quote from Eloi_Roland_Fearthain2011 >>

But I'm worried because I heard dnd above 10th level is really hard to balance because the characters are so strong.

Combat is not hard to balance in my opinion. Most people think of balancing combat encounters before it happens (i.e.: planning out a fight), but do not really do much to balance the encounter once it starts (i.e.: adjust tactics, adjust reinforcements/retreats, adjust HP/damage, fudge dice, etc.). If you are worried about PCs being too strong, the simple answer is to just throw more stuff at them to wear them down. In my opinion, there is no need to excessively balance combat encounters before it happens. Just eye ball it to make sure your monsters have about equal numbers as the party, so the action economies on both sides are about the same; alternatively, if you use a lot of mooks so your side's action economy will not be the same, you can also eye ball it with total average damage of both sides instead. One combat starts, you observe and then fine tune the balance as necessary.

Easiest thing to adjust is tactics. If you want to make the fight more difficult for your party, you can have your monsters focus fire, flank the party to target squishies, spread out a bit to limit the impact of stuff like Fireball, have monsters stay out of reach if they are able (fly, burrow, climb on top of ceiling, etc.), utilize more spellcasters. If you want to make it easier, you basically do the opposite.

Next easiest thing to do is to simply throw monster reinforcements at the party if they are having an easy time. Alternatively, you can also have the monsters retreat if things get too difficult, and you can just handwaive it away by having NPC allies showing up to scare them off, morale is broken when the party downed a monster because that monster was the boss, or survival instincts kicking in whenever a monster gets to half HP.

Another thing to do is to utilize variable HP. So instead of using a monsters' average HP as presented in the stat block and have the monster go down when it recieve that specific amount of damage, you find the monster's minimum and maximum HP, and you choose when the monster dies while it is within that HP range. For example, a skeleton has an average of 13HP, but its minimum is 6 (2*1+4) and maximum is 20 (2*8+4). If your party is having a hard time killing the skeleton, it goes down at 6 HP; if the party is having a breeze, the skeleton will go down at 20 HP instead. If a PC used a really cool move or landed a crit, and the skeleton got dealt 18 damage, you may decide to have the skeleton die right then and there for dramatic effect to make the player feel awesome, instead of waiting for 2 more damage and have the skeleton die from a rather boring attack. By the opposite token, instead of rolling for damage for monsters, you can use average damage instead, so you know you will not accidentally kill a PC; this can also speed up combat too since you are not spending time rolling.

As a GM, you can also fudge dice rolls behind the GM screen. You simply declare a different roll than your actual roll. This is generally viewed as a more drastic form of intervention, and some GMs prefer to never fudge rolls. I personally only do this to help the PCs. For example, while I would fudge rolls to make a monster miss or deal less damage, I would not fudge rolls to make a monster hit nor deal more damage.