Crypto Trading Glossary

Before investing, you should learn some terms of crypto trading. We have prepared this crypto trading glossary to help. Please let us know if you want us to add any term to the crypto trading glossary and we’ll be happy to do so.

Algorithm

A sequence of rules. It solves a problem or performs a task. Crypto trading platforms use algorithms to trade. The more complex it is, the more data the software can use to accurately assess trading opportunities. They are thoroughly tested to ensure good performance.

Auto trading

An automated buying or selling using an algorithm. Orders are pre-set by the trader. When the trade conditions are met, the software does the trade.

Manual trading

A trading process that involves human decision-making. A trader makes or pulls out of trades. This is the opposite of auto trading where software handles trades based on human preset instructions. Manual traders often use software to consolidate information. They may also set alerts for potential trading opportunities. However, a human must authorize all trades.

Trading plan

A systematic method for identifying and trading securities. It considers variables including time, risk and the trader’s objectives. A trading plan outlines how a trader will find and execute trades, including under what conditions they will buy and sell digital assets.

Volatility

Think of it as an unpredictable pendulum that can swing in any direction. For better or worse. An example is when the price of bitcoin rises and falls more than 1% in a day. The higher the volatility, the riskier the trading.

Moving Average (MA)

It is a measure for filtering out the “noise” from random short-term volatility. Think of it as a trend-following indicator based on past prices.

Backtesting

Using historical data to determine the viability of a trade. When designing a system for crypto trading, all rules need to be absolute, with no room for interpretation. The computer cannot make guesses. It has to know exactly what to do. Careful backtesting allows an algorithm to evaluate and refine a trading idea. This helps to determine the trade expectancy.

Trade expectancy

A trader can expect this average amount of profit or loss per trade.

Conditional order

With a conditional order, a trader does not have to monitor the market closely. Software trading takes some of the emotion out of trading by allowing the trader to enter or exit a position automatically at a certain price. Generally, it refers to the order types used in trading strategies.

Limit order

An order to buy or sell a digital asset at a specified price or better. A buy limit order will be executed only at the limit price or a lower one. A sell limit will be executed only at the limit price or a higher one.

Win/Loss Ratio

This is simply the ratio of the total number of successful trades to the number of lost trades. It does not take into account how much was won or lost, just if they were won or lost.

Exchange

This is a website or platform where you can buy and sell digital assets. To find all of the most popular ones in one place, please refer to the Exchange List.

Whale

A person who owns a very large amount of crypto assets. A group of whales can influence the market price.

Sell wall/buy wall

The graphical representation or depth chart where traders can see the current limit buy and sell points.

Margin trading

The act of increasing the intensity of your trades. It involves risking your existing coins. The act is very risky and only experienced traders at certain exchanges even try it.

Bullish

An expectation that the price of an asset will rise.

Bearish

An expectation that the price of an asset is will fall.

ATH

All-Time High. The ATH of bitcoin was about $20,000 in December 2017.

ATL

All-Time Low. The modern ATL of bitcoin was about $3,000 in December 2018.

Altcoin

They are the alternative cryptos launched after the success of Bitcoin. The earliest altcoin was Namecoin. Today, other examples of altcoins include Litecoin, Dogecoin, Ripple and, some say, Ethereum.

Shitcoin

A crypto coin that is not expected to have a positive future.

ICO

Initial Coin Offering. It is similar to an IPO in the fiat world. It is essentially crowdfunding for crypto startups.

Stable Coin

A crypto with extremely low volatility. Stable coins can be used to trade against the overall crypto market. Unlike other coins, they are backed by a reserve of assets such as the dollar or gold.

Arbitrage

Taking advantage of a difference in the price of the same commodity on two different exchanges. An example is comparing BTC prices on Korean exchanges against US exchanges.

FOMO

Fear of Missing Out. It is the overwhelming sensation to join the cause when the price of a digital asset starts to skyrocket.

Pump and Dump

The recurring cycle when an altcoin gets a lot of attention. This leads to a huge price increase, followed by a huge crash.

ROI

Return on Investment. The percentage of profit made from an initial investment. A 100% ROI means that you doubled your capital.

TA

Trend Analysis or Technical Analysis. This refers to the process of studying current charts as a way to predict which way the market will move next.

FUD

Fear, Uncertainty, and Doubt.

FUDster

A person who spreads baseless negativity intentionally so that the price of an asset will fall.

Bottom trading

The act of trying to invest in a digital asset at the minimum price.

Bottom Trader

The final word of this crypto trading glossary is Bottom Trader. A Bottom Trader is a person who engages in the act of bottom trading. An example is when an intending trader watches the price of bitcoin drop from about $20,000 to about $3,000 before investing. Bottom traders do this with the hope that the price will go up someday and they can cash out big.

We hope you have enjoyed this crypto trading glossary and that you are now better equipped to conquer the crypto trading world!

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