So, you have started to get acquainted with the crypto market but there are still some crypto trading terms or abbreviations whose real meaning you don’t understand? You came to the right place because, in this article, we will explain the most used expressions in the simplest possible way.
Without further ado, let’s dive into it.
1. Trading Bot
Aa automated software which places buy and sell orders on exchanges on the behalf of the trader.
2. API
API or Application Programming Interface is a way for various components to communicate with each other. In crypto, API is the system that enables a program (for example, trading bot) to communicate with the user’s exchange account or crypto wallet.
3. Automated Trading
In automated trading, traders set up a specific set of rules for entries and exits that are then automatically carried out by a pre-programmed computer.
4. Backtesting
Once a trader devises a trading strategy, he can test it on some past market timeframes, which is called backtesting.
5. Trading Signal
A signal for market action. Be it to place a buy or sell order, a trading signal is always based on some form of analysis (fundamental or technical).
6. Trading Products/Instruments/Features
Crypto trading products are everything you can trade in the market – bonds, stocks, CFDs, ETFs, futures, etc.
7. Leverage
When trading with leverage, a trader who already has funds he’s going to invest, basically borrows the extra cash from the exchange or a broker to enhance his gains.
8. Go long
Going long is buying a cryptocurrency with the intention of selling it at a higher price. One of the most important crypto trading terms.
9. Go short
Going short is selling a cryptocurrency with the intention of re-buying it at a lower price and lock the profit from the price spread.
10. Derivative trading
All types of trading that don’t include owning the traded asset are called derivative trading, such as Bitcoin CFDs, ETFs, BTC futures contracts, etc.
11. Futures trading
Futures trading is when a buyer and a seller make a contract to buy and sell a cryptocurrency at a pre-determined price on a pre-determined date.
12. Swaps trading
Swap trading is when a trader trades an asset without going on a platform owned by a third party (e.g. exchange).
13. Stop loss
A sell order placed below the buying value of the cryptocurrency to stop a trader from losing more money if the price starts declining.
14. Margin Trading
Like leverage trading, margin trading refers to borrowing money to trade an asset.
15. Margin Balance
The amount a trader borrows to do margin trading.
16. Margin Order
Placing a buying or selling order with a certain amount borrowed from an exchange or a broker.
17. Interest rates on leverage trading
Just like with a bank loan, when trading with a borrowed money, a trader needs to return the loaned funds to the broker or the exchange with interests.
18. Liquidation Level
A level (the exact amount of funds in trader’s account) at which liquidation process is automatically executed at the best available exchange rate. One of the most important crypto trading terms.
19. Guarantee Stop loss
A stop-loss order that guarantees that a cryptocurrency will be sold at that exact pre-determined price. Some CFD trading platforms does offer this feature.
20. Auto Deleveraging (ADL)
Or ADL is a case the exchange or a broker automatically deleverages trader #2 if a trader #1 cannot fill the liquidation. This feature can only be found on certain trading platforms and eToro is a great example.
21. Negative Balance Protection
An automatic system which ensures that a trader trading with leverage doesn’t lose more money than he initially deposited.
22. Trading strategies
A pre-determined set of rules by which a trader behaves in the market.
23. Day trading
A strategy where all buy and sell orders are closed inside a single market session (a day).
24. Swing trading
A strategy where traders take longer time (usually more than a couple of weeks) to close their trading plan.
25. Arbitrage trading
A trading strategy implemented by traders which look to profit from a spread between the price of a cryptocurrency on various exchanges or of the differing ration between more than two coins on a single exchange.
26. HODL
Initially a typo but now considered to mean Hold On for Dear Life means buying and keeping a cryptocurrency for a longer period of time (usually more than a year) in a hope that it will reach some pre-determined price. One of the funniest crypto trading terms.
27. Technical Analysis (TA)
Used for shorter-term trading, Technical analysis is an implementation of various tools on a trading chart in order to discover future market movements. This is an important resource for everyone learning about the crypto market. If you’re interested, you can read our Technical Analysis here.
28. Technical Indicator
A visual representation of an analytical mathematical calculation shown in the cryptocurrency trading chart.
29. Moving Average Convergence Divergence (MACD)
A technical indicator which calculates the difference between cryptocurrency’s 26-day and 12-day Exponential Moving Averages (EMA), with both using closing prices of the measured period.
30. Bollinger Band
A combination of the 20-day Exponential Moving Average (EMA) and two related bands forming a channel which represents the price volatility.
31. Relative Strength Index (RSI)
A momentum indicator, depicted as an oscillator below the trading chart, providing a clear picture if a cryptocurrency is overbought or oversold. It has values between 0 and 100 and moves between those two extremes.
32. Average Directional Index (ADX)
A technical analysis tool used by traders to determine the overall strength of a current trend a cryptocurrency follows in the market.
33. Trading Chart/Graph
A visual representation of a crypto’s price movement, mostly by “candlesticks”.
34. Time interval
The amount of information contained by a single candlestick. In the 15-minutes interval, a single candlestick is going to represent what happened to the price of a cryptocurrency during a period of 15 minutes.
35. Candlesticks
A visual representation of a spread between the opening and closing price of a cryptocurrency during a certain time interval in the chart. A red candlestick means that the price declined while a green one represents positive price movement. This one is among the most important crypto trading terms.
36. Support
The support is the price point where, during the declining price movement, buyers start pushing the price of the cryptocurrency back upwards.
37. Resistance
The price point where sellers, during the rising price movement, start pushing the price back down.
38. Opening price
The price at which an asset begins trading in at the beginning of a trading day. In crypto, since the market is opened 24/7, can refer to the price at the beginning of the calendar day.
39. Closing Price
The price at which an asset ends trading in at the end of a trading day. In crypto, since the market is opened 24/7, can refer to the price at the end of the calendar day in a daily chart.
40. Fundamental Analysis
An analysis performed over the fundamental features of a cryptocurrency and its underlying project to discover its long-term potential (e.g. market competition, development team, regulatory environment, marketing potential, etc.). One of the most important crypto trading terms for those who are learning the trade. You can read our updated Fundamental Analysis here.
41. Social Trading and Copy Trading
Social trading is when investors enable each other to “see” their trades and strategies on online platforms. In turn, that enables copy/mirror trading where investors literally copy each other’s market moves. Etoro is the best example of a social trading platform.
42. Pump and Dump
A market event when the price of a single cryptocurrency suddenly surges pushed up by an unsuspecting buying wave just to be pushed back down by an even heavier selling session, making those that invested near the peak lose a lot of money.
43. Order Book
A section of the exchange where all active buy and sell orders can be seen.
44. Limit Price
Prices at which buyers and sellers place their orders that cannot be immediately filled since they differ from the current market price. One of the most important crypto trading terms.
45. Market Price
The last value a cryptocurrency has been sold/bought for.
46. Fill or Kill
An order which is terminated unless it has been immediately filled.
47. Stop-limit
A conditional trade tactic implemented over an established timeframe combining stop and limit orders with the aim of lowering the risk, mostly implemented in automated trading and trading bots.
48. Trailing Stop
A series of stop-loss orders placed strategically over a declining price range.
49. Order History
Compiled information on all filled orders a trader made on the trading platform.
50. ICO
Initial Coin Offering is a way for companies to fund their ventures by selling their utility tokens to private and institutional investors before releasing them on the open market.
51. Token
Representation of value inside the network. Contrary to coins, tokens enable their owners to participate in the network.
52. Coin
Similarly, to tokes, it is the representation of the value inside the network but does not give the user the power to participate in the network.
53. Ticker Symbol
Abbreviation of the asset’s name (e.g. Bitcoin – BTC).
54. Wallet
A piece of software or hardware which holds private keys that give the user access to his funds.
55. CFD trading
CFD trading is when a broker and a trader sign a contract agreeing to exchange the difference in the value of a cryptocurrency at the end of the contract.
56. Demo trading account
AN account on a trading platform showcasing the user experience and interface where traders can trade fake (worthless) money in the real market conditions.
57. Fiat currencies
Inconvertible currencies made legal by governments (e.g. US dollar, Euro, etc.).
58. ID verification
Verification on the trading platform or similar third party service by personal identification.
59. KYC
Know your customer/client policy implemented usually by trading platforms to be able to trace deposited and withdrawn funds.
60. AML
Anti-money laundering policy also implemented usually by trading platforms in order to prevent illegal practices.
61. Multisig
Multi-signature means that something needs more than one permission to be used.
62. 2FA (two-factor authentification)
A software way of ensuring the safety of a trading account by connecting it with some other device (e.g. smartphone) through an ever-changing series of digits.
63. Private keys
A secret phrase of numbers and letters that allows an owner to access his funds on the blockchain.
64. Market Maker
A person who trades by not taking already placed trade orders but making his own which will be fulfilled in the future (maybe a minute, an hour, or even longer period of time). These individuals usually enjoy lower trading fees.
65. Market Taker
A trader who takes already placed trade orders.
66. Spread
The difference between the highest bid price and the lowest sell price. One of the most important crypto trading terms.
67. Deposits SEPA, Wire transfer
Traditional ways of money transfer. Usually, from a bank to exchange.
68. Proof of Work
PoW is a consensus reaching mechanism on the blockchain-based network used by some of the biggest cryptocurrencies like Bitcoin, Ethereum, etc. Needs a lot of computational power in the form of mining rigs and ASIC miners.
69. Proof of Stake
PoS is a consensus reaching mechanism on the blockchain-based network. Used in various forms by EOS, NEO, etc. Owners stake their coins/tokens in their wallets to secure the network and, in turn, receive rewards in crypto.
70. Volatility
Liability to rapidly change value. Small market caps tends to have greater volatility.
71. Liquidity
The degree to which a cryptocurrency can quickly be bought or sold in the market. The more people trade an asset the more liquid it is.
72. Bull market
A prolonged period of a positive market sentiment when prices tend to rise.
73. Bear market
A prolonged period of a negative market sentiment when prices tend to decline.
74. Market cap
Market capitalization is a number we get when we multiply the number of units of the cryptocurrency present in the open market with the price of a single unit. Represents the “power” of the cryptocurrency.
75. Inflation
A decrease in the purchasing power of the asset caused by new units entering the market. Usually expressed in percentages. Mineable cryptocurrencies have an inflation while pre-mined doesn’t.
76. Hard fork
An event when a single blockchain, through a certain software upgrade, gets split into two and both versions remain relevant in the market. Can happen when a development team behind the project disagrees on the future of the project and decides to go separate ways (e.g. Bitcoin – Bitcoin Cash or Bitcoin ABC – BItcoin SV).
77. Mining
Using hardware to solve mathematical tasks in order to validate transactions on the network in PoW systems and, in turn, receive rewards for the service.
78. Mining Reward
A cryptocurrency reward that’s given to an individual for verifying transactions on the blockchain-based network.
79. Mining Difficulty
A value representing how hard it is to validate a transaction on the blockchain and is determined by an overall hash rate on the network and network’s global mining difficulty.
80. Network fee
A fee paid by an individual for doing transactions on the network. This is usually received by the miners or those who stake their coins or lock them up in a masternode.
