Crypto Trading Dictionary

In this article, we provide you with a complete dictionary of some expressions and special terms used in the cryptocurrency market. Knowing these terms can be very useful for understanding better and faster of this market.

Blockchain

A decentralized digital ledger that records transactions on a network of computers.

Cryptography

The practice of secure communication that allows for secure transactions and the creation of new units of cryptocurrency.

Cryptocurrency

A digital or virtual currency that uses cryptography for security, often used as a medium of exchange.

Token

A digital asset that represents a specific asset or utility on a blockchain.

Altcoin

Any cryptocurrency other than Bitcoin.

Bitcoin

The first and most well-known cryptocurrency, created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto.

Mining

The process of creating new units of cryptocurrency by using powerful computers to solve complex mathematical equations.

Miner

A miner is someone who participates in the process to solve complex mathematical problems in order to add new and valid transactions to the blockchain by using specialized computers. Miners will be rewarded with newly mined cryptocurrency coins as well as transaction fees for their efforts.

 

Mining Rig/ Mining Hardware

A mining rig is a specialized computer that is designed specifically for cryptocurrency mining. These rigs often consist of multiple high-end graphics processing units (GPUs) or application-specific integrated circuits (ASICs) that are optimized for the particular cryptocurrency being mined. Mining rig requires a significant amount of computational power and energy so it can be very expensive.

Wallet

A digital wallet that holds cryptocurrency and allows for the sending and receiving of funds.

Hardware Wallet

Is a physical device that is designed to store private keys and provide a secure way to manage and access cryptocurrencies. It is typically small device like USB that can be connected into a computer or mobile device.

Software Wallet

A software wallet or digital wallet is an application you install on your devices (Computer or mobile) that allows you to manage and store  and manage cryptocurrencies.

Exchange

An exchange is a platform that provide a marketplace where users (trader) come together to buy, sell, and trade cryptocurrencies.

Centralized Exchange (CEX)

This is the most common type of cryptocurrency exchange that is owned by a single entity. In a CEX, all trades are conducted through a central order book, which matches buyers and sellers based on the current market price of the cryptocurrency being traded.
Traders must create an account to participate, and they must comply with Know-your-Customer/Anti-Money Laundering (KYC/AML) ID verification to trade in most of the centralized exchanges.

Decentralized Exchange (DEX)

Decentralized exchange operates on a decentralized network and allow users to trade directly with each other without the need for a central authority or an intermediary.

Fiat Currency

Traditional currency such as the US dollar or Euro, which is not backed by a commodity like gold or silver.

Private Key

 A secret code that is used to access and spend cryptocurrency in a wallet

Public Key

A public code that is used to receive cryptocurrency in a wallet.

Satoshi

The smallest unit of Bitcoin, named after the pseudonymous creator of Bitcoin, Satoshi Nakamoto.

ICO

Initial Coin Offering, a fundraising mechanism for new cryptocurrencies that involves selling a portion of the total supply of coins to early investors.

HODL

A misspelling of “hold” that has come to mean holding onto cryptocurrency instead of selling it, often during periods of market volatility.

FOMO

Fear of missing out, a common emotion among traders who worry about missing out on potential gains.

Chart of Price

 It’s a graphical representation of the historical price movements of a  cryptocurrency pair (vertical axis) over a given period of time (horizontal axis) that help traders and investor to make decisions about buying, selling, or holding that pair.

Candlestick Chart

A type of chart used in technical analysis to represent price movements of an asset over time.

Market Capitalization

The total value of a cryptocurrency, calculated by multiplying the current market price by the total number of coins in circulation.

Trading Volume

 The total number of coins traded within a specific period of time.

Support Level

A price level at which buyers tend to enter the market and prevent the price from falling further.

Resistance Level

A price level at which sellers tend to enter the market and prevent the price from rising further.

Take Profit (TP)

An order placed by a trader to sell an asset at a predetermined price in order to take profits.

Stop Loss (SL)

An order placed by a trader to automatically sell a cryptocurrency at a predetermined price in order to limit losses.

Liquidity

The ease with which an asset can be bought or sold on an exchange without affecting its price.

Order Book

A list of all buy and sell orders for a particular cryptocurrency on an exchange.

Watch List

A watch list is a list of assets that traders and investors create it to keep track of assets they are interested in and to monitor market conditions that may affect the value of those assets.

Margin Trading

Trading with borrowed funds, allowing traders to increase their exposure to the market and potentially earn higher profits (but also increases the risk of losses).

Bullish

A positive outlook on the market, indicating that prices are expected to rise.

Bearish

A negative outlook on the market, indicating that prices are expected to fall.

FUD

Fear, uncertainty, and doubt. This expression is used to describe negative sentiment in the market that can lead to a sell-off.

Pump and Dump

A fraudulent scheme where a group of traders artificially inflate the price of a cryptocurrency through coordinated buying, then sell off their holdings for a profit.

Whale

A trader or investor who holds a significant amount of cryptocurrency and can influence the market with their buying and selling activity.

Bagholder

An investor who bought a cryptocurrency at a high price and is now holding onto it, hoping for the price to rise in the future.

Mooning

When a cryptocurrency’s price experiences significant and rapid upward movement.

Arbitrage

The act of buying and selling an asset in different markets to take advantage of price differences and generate a profit.

Candlestick patterns

Specific patterns that appear on a candlestick chart and can provide indications of future price movements.

Technical Indicator

A technical indicator is a tool used by traders to analyze the market trends and forecast future price  of the cryptocurrency pairs. It’s based on mathematical calculation of historical price, volume, or open interest information. Common technical indicators include moving averages, RSI, Bollinger Bands, and MACD. 

Leverage

The ability to trade with borrowed funds, allowing traders to increase their exposure to the market and potentially earn higher profits (but also increases the risk of losses).

FUDster

Someone who spreads fear, uncertainty, and doubt about a particular cryptocurrency or the market in general.

Shill

Someone who spreads fear, uncertainty, and doubt about a particular cryptocurrency or the market in general.

REKT

A slang term used to describe someone who has lost a lot of money in a trade or investment.

Bag

A term used to refer to a cryptocurrency that someone holds in their portfolio.

Volatility

The degree of price change that an asset experiences over a certain period of time.

Margin

The amount of money that a trader must deposit with a broker in order to open and maintain a leveraged position.

Asset

Something that has value and can be bought or sold, such as stocks, bonds, commodities, or currencies.

Bear market

A market condition characterized by declining prices and pessimistic sentiment among investors.

Bull market

A market condition characterized by rising prices and optimistic sentiment among investors.

Broker

A company that acts as an intermediary between buyers and sellers of financial assets.

Commodity

A raw material or primary agricultural product that can be bought and sold, such as oil, gold, or wheat.

Contract for Difference (CFD)

A type of derivative that allows traders to speculate on price movements without owning the underlying asset.

Fundamental analysis

A method of analyzing financial markets based on economic, financial, and other qualitative and quantitative factors.

Futures Trading

It is a type of trading that allows traders to buy or sell a cryptocurrency at a predetermined price and date in the future through exchanges or private contracts.

Spot Trading

It’s a type of trading that traders or investors sell and buy an asset at the current market price, without any contract for future delivery. 

Gap

A price movement where there is a significant difference between the closing price of one period and the opening price of the next period.

Short Position

It is a type of trading position that refers to the sale of an asset with the hope of buying them back at a lower price and making a profit over time.

Long Position

It is a type of trading position where traders buy an asset with the expectation that its price will increase in the future and they can earn profit by selling it later.

Hedging

The practice of taking a position to offset potential losses from another investment.

Initial Public Offering (IPO)

The first sale of stock by a private company to the public.

Inflation

The rate at which the general level of prices for goods and services is rising.

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the loan amount.

Liquidity Provider

A market participant who provides liquidity to the market by buying and selling securities.

Lot Size

A lot size refers to the number of units of a particular asset that is being bought or sold in a single transaction. 

Margin Call

A demand for additional funds from a broker to cover losses in a trader’s account.

Market Maker

A financial institution that quotes both a buy and sell price for a security and stands ready to buy or sell at those prices.

Portfolio

A portfolio is a collection of diversified investments (cryptocurrency pairs) owned by an investor or trader.

Position

The amount of a currency held by an investor or trader.

Order

An order refers to a request made by a trader to execute a trade on an exchange and involves important details such as the type and amount of pair, the direction of the trade (buy or sell), TPs, Stoploss, and others.

Price Action

Price action is the knowledge of identify potential buying and selling opportunities by investigating asset’s price movement on a chart over time, without using any technical indicators. Price action traders often look for patterns in the price movement, such as support and resistance levels, trend lines, and candlestick patterns and make trading decisions based on them.

Price-to-earnings ratio (P/E ratio)

The price-to-earnings ratio is a valuation metric that compares a company’s stock price to its earnings per share.

 

Profit and Loss (P&L)

Profit and loss, also known as P&L, is a financial statement that shows the revenue, expenses, and resulting profit or loss of a transaction over a specified period of time. P&L are important financial tools that allow traders to track their performance over time.

Retail Trader

A retail trader that also called individual traders or small traders is an individual trader who trade in much smaller volumes than institutional traders, such as banks, hedge funds, or mutual funds. 

Risk Management

Risk management is an important process in the financial market, that traders or investors use to protect their portfolios from significant losses. This process is included identifying, assessing, and controlling risks in investment portfolios. 

Scalping

Scalping is a trading strategy that involves taking advantage of small price movements within a very short time frame. In this strategy traders prefer to make many small profits throughout the trading session, rather than waiting for larger price movements over a longer period. 

Sell-off

It is a rapid and significant decline in the price of a pair that is caused by selling a large number of holding assets.

Social Trading

Social trading is a type of trading that allows investors to communicate with each other and share trading ideas and strategies through an online platform. They can also view the trading history, performance, and portfolio of other traders, and follow and copy them.

Mirror Trading

Mirror trading is a type of social trading where investors can automatically copy the trades of other traders in real time through an online platform.

Copy Trading

Copy trading is a more straightforward alternative to mirror trading that is much better for novice or small-scale traders. In copy trading, you have the option to choose specific traders to copy their trades individually or their entire investment approach. You also can allocate a percentage of your account balance to following a single trader or multiple traders simultaneously.

Auto Trading

Auto trading refers to the use of automated systems or software to execute trades in financial markets.

Paper Trading/ Demo Trading

It involves using a demo trading account that allows you to trade in a real market situation but with virtual money. It is a useful tool for beginners who want to gain experience and power their skills.

Timeframe

A timeframe refers to the period of time used to display and analyze the price data of a cryptocurrency. Timeframes usually provide as a second, minute, hour, day, week, or even months or years.

Trading Plan

A trading plan is a set of rules and guidelines including strategy for entering and exiting trades, risk management rules, and overall goals and objectives that traders create for themselves to be disciplined and successful in the markets.

Trading Strategy

A trading strategy is a set of rules and guidelines that a trader uses to make informed decisions about when to enter and exit trades in order to achieve consistent profits in the market.

Transaction

A transaction refers to the act of buying or selling a cryptocurrencies on trading platforms.

Trend Line

It is a straight line on a chart that drawn by connecting two or more price points (lows or highs) and is used to identify the direction and strength of a trend.

Up Trend

An uptrend is a pattern of higher highs and higher lows in the price chart of an asset over time. This pattern suggests that there is a strong demand for the asset and that buyers are willing to pay higher and higher prices for it.

Down Trend

A downtrend is a pattern of lower lows and lower highs in the price chart of an asset over time. This pattern suggests that there is a strong supply of the asset, and that sellers are willing to accept lower and lower prices for it.

Confirmation

The confirmation refers to a signal or indication that validates a trading decision and trader wait for it, to be sure their analysis and prediction of the market direction was correct.

Oscillator

An oscillator is a technical indicator that measures the momentum of price movements, by comparing the current price to its historical price range over a specified period of time, and typically plotted below the price chart and fluctuate between overbought and oversold levels.

Breakout

A breakout refers to a price movement of a cryptocurrency that moves beyond the level of support or resistance.

Momentum

The strength and persistence of a cryptocurrency price movement in a particular direction.

Overbought

It is a term used to describe a situation in the market that suggests that there are too many buyers and the price of pair has risen sharply and quickly, leading to an imbalance in supply and demand.

Oversold

Oversold refers to a situation in which the price of a currency has fallen too far and too fast. It means there are too many sellers on the market and causing an imbalance in supply and demand.

Rate of return

The rate of return is a percentage measure that represents the gain or loss on an investment over a specified time period.

Return on investment (ROI)

It is a financial metric used to evaluate the profitability of an investment and represented as a percentage of the initial investment cost.

Win Rate

Win rate is the percentage of profitable trades out of total trades executed.

Listing

The process by which a security is approved for trading on an exchange.

Market Maker

A market maker is a trader who provide liquidity to the market by placing limit orders which is not immediately executed, but rather placed in the order book.

Market Taker

A taker is a trader who places a market order, which is executed immediately at the current market price, taking liquidity from the order book.

Maker-taker fee schedule

A fee structure used by some exchanges where market makers are paid a fee for providing liquidity to the market, while takers pay

Index fund

A type of mutual fund or ETF that tracks the performance of a specific index, such as the S&P 500.

Hedge fund

A private investment fund that uses various strategies to generate high returns for its investors.

Futures contract

A standardized agreement to buy or sell a specific commodity or financial instrument at a predetermined price and date.

Spread

The difference between the highest bid and the lowest ask price on an exchange.

Technical Analysis

The analysis of a pair price and volume data to identify patterns and trends that can be used to predict future price movements.

Backtesting

The process of testing a trading strategy using historical data to see how it would have performed in the past.

Correlation

The relationship between two securities or asset classes and how they move in relation to each other.

Derivative

A financial contract whose value is derived from the value of an underlying asset, such as options or futures.

Reversal

A change in the direction of a security’s price movement.

Risk Appetite

The level of risk that an investor is willing to take on.

Swing Trading

The practice of holding positions for a few days to a few weeks to capture short-term price movements.