Crypto Trading Terminology for Beginners
To new investors, cryptocurrency trading is perplexing. While the professionals may disagree, when asked about their first day at work, most will have second thoughts. Don’t worry. Crypto investing is not rocket science. We are going to make it simple. Consider these quick terms to help you accelerate your crypto trading journey. Let’s get started!
More blockchain terms can be found here.
Crypto arbitrage trading is a financial strategy that involves buying and selling cryptocurrencies and profiting from any price differences between the exchanges where the cryptocurrencies are traded.
All-time high (ATH)/ All-time low (ATL)
This is the highest or lowest price that has ever been paid for a specific asset.
what buyers are willing to pay for an asset.
Average Directional Index (ADX)
Regardless of the trend's direction, the ADX is used to gauge its strength.
Accumulation/ Distribution Line
The accumulation/distribution (A/D) line examines where the price is closed within the period's range and multiplies that figure by volume to determine the supply and demand of an asset or security. Since the A/D indicator is cumulative, its value is added to or deducted from the previous period's value.
The bid price is the price at which people are attempting to sell an asset.
A bull market is defined as a period in which market prices are generally trending upward and public perception is positive.
A bear market is the inverse of a bull market, with negative expectations as market prices appear to be falling.
Buy order / Sell order
Buy orders, also known as bids, are created when a person wishes to purchase an asset at a specific price. When someone wants to sell an asset at a specific price, they place a sell order, also known as an ask.
Buy The Fucking Dip (BTFD)
The volatility of cryptocurrencies is their biggest drawback. Their value fluctuates frequently, causing them to routinely dance between highs and lows. BTFD, or Buy The Fucking Dip, is a risky strategy for the unwary crypto investor. It's all about buying whenever the cryptocurrency falls. The sole goal is to maximize the crypto amount for a given sum in the hope of making large profits in the future.
Like "HODL," BUIDL is a technical term. It alludes to a cryptocurrency investing approach whereby investors are required to actively develop and add to the current system to raise its status. Though BUIDL is not as well-known as HODL, it is nonetheless frequently employed by different groups within the crypto world.
Copy trading describes the practice of investors taking positions in the futures market that are identical to those of other investors (often regarded as professional traders or experts).
A trader or investor's collection of cryptocurrencies is known as a crypto portfolio. Altcoins and crypto-financial products are frequently included in portfolios together with a variety of other assets.
A candlestick chart is a collection of multiple candles used by traders to forecast price movement in any market.
Centralized crypto exchange
Centralized refers to a crypto exchange that was built and is run by a business. These exchanges are seen as centralized since a single organization controls all transactions, and establishes the exchange's guidelines, and fees. For example, Bitget Exchange.
A statistical measure called correlation is used to show the direction and intensity of a relationship between two sets of data. These two sets of figures are often the prices of two assets, such as stocks, commodities, currencies, market indexes, or cryptocurrencies, in the context of finance.
A kind of derivative known as COIN-Margined Contracts derives its value from the underlying cryptocurrency it represents. These financial instruments provide another opportunity to experience cryptocurrencies without really owning any of them.
Do Your Own Research (DYOR)
Do Your Own Research. This is frequently used as a warning to other investors by cryptocurrency influencers, reminding us that there is no better substitute for due diligence than our own research. It is important to remember that cryptocurrency influencers and media outlets may have different motivations and objectives.
Day trading in securities is the practice of buying and selling financial instruments on the same trading day.
Dollar-Cost Averaging (DCA)
Regardless of price, dollar-cost averaging is investing the same sum of money in a target security at regular intervals over a predetermined length of time. Investors can lower their average cost per share and lessen the effect of volatility on their portfolios by employing dollar-cost averaging.
ERC-20 is the most widely used crypto-token standard, and it is used on the Ethereum network. It makes it simple for developers to create digital currencies that are immediately compatible with existing infrastructure.
This is the Ethereum network's non-fungible token (NFT) standard. It enables the creation of one-of-a-kind, non-counterfeitable tokens. It can be used to tokenize real-world unique items or to create digital collectibles and gaming items.
Ethereum Virtual Machine (EVM)
A worldwide blockchain-based computer is essentially what the Ethereum Virtual Machine, or EVM, is. It gives programmers a runtime environment in which to build decentralized, trustless apps for the Ethereum network.
Fiat money is money that exists within the traditional financial ecosystem. The euro and the US dollar are examples of fiat currencies. Working with fiat currencies in the blockchain landscape typically necessitates entrusting your funds to a centralized central entity.
Fear of Missing Out (FOMO)
The fear of missing out, FOMO is a form of social anxiety caused by the perception that others are having fun or reaping the benefits of an event while the person experiencing FOMO is not. In the crypto market, it usually refers to watching non-owned tokens experience explosive price increases.
Fear, uncertainty, and doubt—usually refer to information that is likely to lead to a pessimistic view of the market.
Fundamental analysis (FA)
A method of determining the worth of an asset and forecasting its future performance. In the context of crypto projects, it considers factors such as a product's technological and innovative value, the team behind it, or the token distribution model and its use cases.
Futures trading is a method of speculating on the value of assets such as cryptocurrencies without actually owning them. Cryptocurrency futures, like commodity or stock futures, allow traders to speculate on the future value of a digital currency.
Grid trading is the process of placing orders above and below a predetermined price, resulting in a grid of orders with incrementally increasing and decreasing prices. The foreign exchange market is most commonly associated with grid trading.
In the context of a 24-hour trading cycle, high refers to the highest price reached by Bitcoin or any other asset in a 24-hour period. Meanwhile, low refers to the lowest price attained by a specific asset during the 24-hour trading cycle.
The block reward for Bitcoin mining is reduced by 50% at each halving occasion. A halving occurs after 210,000 blocks have been mined since the previous one, which occurs roughly every 4 years. The Bitcoin network began with a 50 BTC block reward and is now at a level of 6.25 BTC per block after three halvings.
HODL refers to the act of not selling your cryptos, which is frequently counter to the current market trend. By HODL, the user attempted to distinguish between the weak hands, who sell at the first signs of a slide, and the smart hands, who can price the market accurately. In the middle is a regular trader who only HODLs.
An opportunity cost is a better way to define an impermanent loss. Impermanent loss happens when you provide liquidity to a certain pool and the value of your assets in the pool changes.
A K-line depicts the daily variation in stock prices; in addition to displaying the close price, open price, high price, and low price for the day, it also highlights the size of any price differences.
A technical indicator called the KDJ indicator is used to evaluate and forecast changes in stock trends and price patterns in a traded asset. The random index is another name for the KDJ indicator. It is a very useful technical indicator that is frequently applied to short-term stock/crypto market trend analysis.
The line ar price scale, also known as arithmetic, represents price on the y-axis by using equidistant spacing between the designated prices.
A ledger is a transactional database. The ledger in the context of cryptocurrencies is the transaction history of a specific cryptocurrency as stored on the blockchain.
There are two types of liquidity. It is most commonly used to describe the ability of a cryptocurrency to be freely purchased and sold. It can refer to the number of cryptocurrencies available for trading on a decentralized exchange's liquidity pool.
It is an exchange order to buy or sell an asset at a specific price or better. A buy order will execute at the target price or lower. A sell order will execute at the target price or higher.
It is a trading strategy that involves the use of borrowed funds. When compared to traditional trading, it allows traders to leverage their positions and maximize their profits while also exposing them to higher risks.
Margin mode: Isolated Margin vs. Cross Margin
Cross Margin: When two open positions using the same settlement cryptocurrency are involved, the margin is shared.
To avoid liquidation, a position may, when necessary, draw more margin from the total account balance of the relevant cryptocurrency.
Isolated Margin: A position's allotted margin is limited to a certain amount.
Market Capitalization. The total value of an asset and its market is represented by the asset's price multiplied by its circulating supply. It is frequently used to assess the success of a project.
A mining pool is a collection of miners who have pooled their computing or hashing power. Because miners in proof-of-work blockchains compete to be the first to create new valid blocks, pooling can assist these participants in increasing or balancing their mining profits.
Moving Averages (MA)
An indicator that is widely employed in technical analysis is the moving average (MA). It creates a continuously updated average price to assist smooth out pricing data. A currency is in an uptrend if its moving average is increasing, whereas a downtrend is indicated by a dropping moving average.
The MVRV Z-Score for bitcoin is based on two values: its market value (price divided by the total quantity of bitcoin) and its realized value (what each coin was last sold for). The Z-score methodology can help you determine when it is a good time to purchase or sell bitcoin depending on whether it is trading above or below its price.
To ensure that your transaction is processed on the Bitcoin or Ethereum network, you must pay a network fee. The fee is used as an incentive to reward network participants, such as miners and validators, for processing transactions and assisting in the network's security.
Network Value to Transaction Ratio (NVT Ratio)
The NVT (Network Value to Transaction) indicator shows how the volume of transfers and market capitalisation relate to one another. The price-to-earnings (PE) ratio of cryptocurrencies is a common name for it.
A paper wallet is a cryptocurrency wallet that is physically stored on paper. The goal of these wallets is to minimize private key exposure. This is a type of "cold storage," in which private keys are not accessible to any internet-connected device that could be hacked or attacked. Paper wallets are widely regarded as an unsafe way to store your cryptocurrency today because they require the use of a centralized website and GUI (graphical user interface)—which are just as insecure and vulnerable to attack as any other centralized service.
Return on Investment (ROI)
Return on investment (ROI) is a monetary metric used to evaluate the effectiveness of asset investment. It serves as a gauge of how much more valuable your investment has become over time.
Relative Strength Index (RSI)
Relative strength index (RSI) is a momentum indicator that shows when an asset or cryptocurrency is overbought or oversold. In a nutshell, RSI is an oscillator that determines the high and low bands between two opposing values while also calculating the amount and pace of price variations.
Spot trading involves purchasing and selling cryptocurrencies at current market rates in an effort to turn a profit.
Locking up cryptocurrency holdings to collect rewards or interest is a technique known as crypto staking.
Selling a cryptocurrency with the intention of later buying it back at a cheaper price is known as cryptocurrency shorting.
A form of investment known as "crypto social trading" enables investors to copy the trading methods of more seasoned cryptocurrency traders.
Support and resistance
Support and resistance are price points (areas in graphs) on trading charts that see a lot of buying and selling activity. A level at which an asset's price stops dropping is referred to as support. Whereas resistance is the point at which the price of an asset ceases to rise.
The economics of a token is referred to as tokenomics.
It outlines the elements, such as token production and distribution, supply and demand, incentive systems, and token burn schedules, that affect a token's use and value.
Technical analysis (TA)
Technical analysis is the process of analyzing price charts and using various market indicators to determine the market's state. This is a complex subject for expert traders who want to use technical analysis to their advantage when predicting future market movements.
Smart contract platforms such as Ethereum and Binance Smart Chain provide developers with a testing environment, known as a testnet, in which they can deploy and test smart contracts. These testing environments typically operate in the same manner as the main network, but the cryptocurrencies used are worthless and can be obtained for free from a testnet faucet.
Tokens are typically used to describe tokens that have been issued by deploying a smart contract to the Ethereum blockchain, as opposed to coins. Thousands of tokens exist today, and many of the top 100 cryptocurrencies by market cap are Ethereum tokens.
TradingView is a social network and multi-platform charting service for traders and investors. It allows users to monitor the price charts of hundreds of different assets, including cryptocurrencies, as well as share and discuss their market ideas.
Unspent transaction output (UTXO)
In cryptocurrency networks, wallet balances are not stored as variables, such as a balance of 100 BTC. Instead, they are derived from several UTXOs, which are essentially units of unspent cryptocurrency left over from the sum of all transactions performed on the wallet. The total of an address's UTXOs equals the wallet's available balance.
A crypto unit price is the price per each cryptocurrency.
USDT-Margined / USDC-Margined Futures
One type of digital asset derivative is the USDT/USDC-margined contract.
Depending on their own opinion, users can profit from the growing or declining value of digital assets by taking long or short positions. Denominated in USDT, Bitge t USDT-margined contract includes USDT-margined and USDC-margined futures.
Validators are blockchain network participants who verify incoming transactions. Validators, who are used in proof-of-stake platforms instead of miners, help to maintain the integrity and security of a blockchain while receiving rewards for their efforts. The network selects validators to validate new blocks based on the amount of cryptocurrency they have staked in the network.
Volatility, the inverse of stability, refers to an asset's proclivity to fluctuate in price. Bitcoin and other cryptocurrencies are notoriously volatile, as is to be expected in such a young market, and this can be the primary drawback for crypto traders.
Cryptocurrency owners use wallets as tools to manage their private keys and as a transactional interface. Wallets can be custodial or non-custodial today, and they are available as hardware and software. Here, the essential point is whether or not the user still has complete control over their private key.
A "whale" is a colloquial term for major players in the cryptocurrency markets, ranging from institutional investors to hedge funds or wealthy individuals.
Yield farming is the practice of lending or staking cryptocurrencies in exchange for benefits like interest. In order to calculate their returns, yield farmers use annual percentage yields (APY).
A confirmed transaction that has not yet been recorded on a blockchain.
The quantity of coins that have changed hands within a specified period, often 24 hours, is the trade volume of a cryptocurrency. In other words, the value of all purchases and sells completed in a single day is reflected in a cryptocurrency's 24-hour trading volume.
This was our humble attempt to explain some of the most frequently used crypto terms for beginners. Still, there is far too much to cover in a single article. However, we hope that these first few terms are sufficient to get you started on your crypto journey.
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