Cryptocurrency trading comes with its own unique language that can be overwhelming for novice traders. Understanding these terms is essential to navigate the complex world of crypto trading effectively and avoid costly mistakes. To assist you in this journey, we have compiled a comprehensive glossary of essential cryptocurrency trading terms.
Airdrop
A free distribution method of cryptocurrencies, often used during hard forks to attract new users or retain existing ones.
Altcoin
Any cryptocurrency other than Bitcoin, although some argue that Ethereum should also be excluded from this category.
AML
Anti-money-laundering laws, regulations, and procedures designed to combat illicit financial practices.
Arbitrage
A strategy to profit from price differences between various exchanges by buying low on one exchange and selling high on another.
Ashdraked
To lose all your money by shorting Bitcoin, inspired by a Romanian investor’s unfortunate experience.
Ask Price
The price at which a seller is willing to sell their cryptocurrency.
ATH
‘All-time High,’ representing the highest price ever reached by a cryptocurrency.
Bagholder
An individual is left holding a depreciating coin after it has been pumped and dumped.
Bear
A trader who anticipates a market downturn, with a bear market characterized by falling asset prices.
Bear Trap
A situation where falling prices prompt bearish traders to sell, only for prices to reverse, trapping them.
Bid Price
The price at which a buyer is willing to purchase a cryptocurrency, is the opposite of the ‘Ask Price.’
Bitcoin ATM
An automated teller machine that allows users to buy Bitcoin using debit or credit cards.
Blockchain
The underlying technology of cryptocurrencies, is a public database secured by cryptography that can only be updated by its owners.
Bollinger Band
A margin around a cryptocurrency’s price indicates overbought or oversold conditions.
BTD
‘Buy the dip,’ an advice to purchase an asset during a price decline.
Bubble
A state where a cryptocurrency’s price stabilizes before experiencing a rapid increase followed by a sharp decline.
Bull
A trader who expects a market upturn, with a bull market characterized by rising asset prices.
Bull Trap
A situation where rising prices prompt bullish traders to buy, only for prices to reverse, trapping them.
Candle/Candlestick Chart
A popular price chart displaying the highest, lowest, opening, and closing prices of a cryptocurrency during a specific period.
Close
The end of a trading session or the completion of a trade.
Cold Storage
A secure method of storing cryptocurrencies offline, often on hardware or paper wallets.
Dead Cat Bounce
A temporary price recovery is followed by a further decline in a cryptocurrency’s price.
Deposit Fee
A fee is charged by exchanges when depositing fiat currency, either fixed or based on the transaction amount.
Depth Chart
A visual representation of buy and sell orders in the cryptocurrency market.
Derivatives Market
A market for financial instruments like futures and options based on underlying assets.
Deterministic Wallet
A wallet that generates keys and addresses from a single ‘seed’ for easy backup and recovery.
ETF
An Exchange-traded Fund is an investment fund traded on exchanges and trading platforms.
Bitcoin Dominance
The market share ratio of Bitcoin compared to other cryptocurrencies.
Double-spending
The successful use of the same cryptocurrency for multiple transactions simultaneously.
Exchange
A platform facilitating the exchange of cryptocurrencies for other cryptocurrencies or fiat money.
Fiat Currency
Government-controlled legal tender not backed by a commodity, such as USD, EUR, and GBP.
Futures
An agreement to buy or sell an asset at a predetermined price on a specific date.
FUD
Negativity and panic spread to profit from market uncertainty.
Going Long/Short
A margin trading situation where traders profit from rising/falling cryptocurrency prices.
Hardware Wallet
A physical device for securely storing cryptocurrencies.
Hot Wallet
An online-accessible wallet is less secure than cold storage options.
JOMO
‘Joy of missing out,’ is a concept advising traders to assess situations carefully without fear of missing opportunities.
KYC
‘Know Your Client,’ a procedure requiring traders to confirm their identity on trading platforms.
Limit Order
An order to execute a trade when a cryptocurrency’s price reaches a specified level.
Liquidity
The ease of buying or selling a cryptocurrency without significant price impact.
MACD
The Moving Average Convergence/Divergence indicator is used in technical analysis.
Margin Call
A situation where securities in a trader’s account fall below a certain threshold, requiring additional funds or asset sales.
Margin Trading
Trading with leverage by borrowing funds to increase buying power.
Market Capitalization
The total value of a cryptocurrency is calculated by multiplying the price per coin by the total number of coins.
Mooning
A rapid and significant increase in a cryptocurrency’s price.
One Cancels The Other Order
A pair of orders where one is executed, canceling the other to manage risk and market entry.
Open/Close
Opening a position involves entering the market while closing it requires selling or buying the cryptocurrency.
OTC
‘Over The Counter’ trading directly between two parties without exchange oversight.
Pair
A trading strategy involving two opposing positions in related assets to hedge against market fluctuations.
Paper Wallet
A wallet with keys and addresses printed on paper for secure storage.
Pump and Dump
A strategy to inflate a cryptocurrency’s price before crashing it.
Resistance
A price level that a cryptocurrency rarely exceeds.
ROI
Return on investment, indicating profit compared to the initial investment.
RSI
Relative Strength Indicator used to determine overbought or oversold conditions in the market.
Sig/Signature
An encrypted authentication key for secure transactions.
Software Wallet
A program-based cryptocurrency storage solution on a computer.
Spread
The price difference between the buying and selling prices of a cryptocurrency.
Stop Loss Order
An order to limit losses by stopping a trade at a predetermined level.
Support
A price level that a cryptocurrency’s price does not fall below.
Technical Analysis
A trading strategy based on statistical data to evaluate cryptocurrency investments.
Think Long Term
Encouragement for traders to focus on long-term investments for greater profits.
Trading Volume
The total amount of cryptocurrency traded within a specific period.
Trading Fee
A fee is charged for transactions on exchanges or trading platforms.
Volatility
The degree of price fluctuations in a cryptocurrency indicates its risk level.
Whale
An individual holding a significant amount of cryptocurrency capable of influencing market dynamics.
Withdrawal Fee
A fee charged by exchanges or platforms for withdrawing funds from a trading account.
This glossary provides a comprehensive overview of essential cryptocurrency trading terms to help traders navigate the market effectively. Understanding these terms is crucial for making informed decisions and maximizing trading success. Stay informed and empowered in your cryptocurrency trading journey.