Crypto Trading Terms
Familiarize yourself with common crypto terms
Beginners making an entry in the world of crypto may be baffled by the industry’s long list of jargon and shorthand phrases. To many, it may seem as if crypto traders are speaking an entirely different language. However, the terminologies used in this industry are pretty easy to grasp, and before long, you’ll have picked up on quite a few. This article lists and defines some of the most common cryptocurrency trading terms you will come across.
An exchange is a cryptocurrency marketplace where traders can buy and sell digital assets. Today, there are numerous crypto-exchanges in existence, with the number increasing on an annual basis. Some of the biggest crypto-exchanges include Binance, Bittrex, Coinbase, and KuCoin.
Fiat refers to any government-issued currency such as the Euro or the U.S. dollar. Most traders start off using fiat currency to purchase cryptocurrencies from exchanges.
A whale is any trader or organization that owns or controls large amounts of cryptocurrency, large enough to create price movements in the market. This word traces its origins from casinos.
Limit Order/Limit Buy/Limit Sell
A limit order is an order placed by traders to either purchase or sell a cryptocurrency when the price meets a certain threshold. It can be thought of as a sale sign. These orders are what is sold and bought each time traders place market orders.
Market Order/Market Buy/Market Sell
A market order refers to a simple sale or purchase at prevailing prices in the market. A market buy means buying a digital currency as per the price and volume in the order book. A market sell is to sell at the most expensive order on the books.
Margin trading is the art of magnifying the intensity of your trades by staking your already existing cash. In margin trading, a trader buys an asset using funds that they have borrowed from a broker. The advantage here is that if the assets end up increasing in value, the trader will make substantial profits. However, if things go south, the trader can be left with substantial debt. Therefore, this is a risky trading method and should only be conducted by experienced traders.
Going long, or taking up an extended position, is what cryptocurrency traders do when they expect the prices of crypto to rise. Therefore, they execute a margin trade that will return profits if prices do happen to rise.
Going short, or taking up a short position is what crypto-traders do when they expect the prices of crypto decrease. They do so to ensure that they make a substantial profit once the prices of their chosen margin trades decrease.
Bullish markets are markets that have positive price movements. For instance, the cryptocurrency market in 2017 leading up to the all-time high price of $19,000 for Bitcoin was a bull market. Bullish, on the other hand, is a term used to express expectations that the prices of crypto are going to rise.
This is the direct opposite of a bull/bullish market. Bearish markets are markets that have negative price movements. Whenever traders say that they are ‘bearish’ about the market, they mean that they expect the prices of crypto to decrease.
All-Time High (ATH)
This represents the highest price at which a cryptocurrency or digital asset has ever been sold.
All-Time Low (ATL)
This represents the lowest price that a cryptocurrency or digital asset has ever been sold.
Altcoin is used to refer to alternative cryptocurrencies, which essentially means all crypto coins and tokens other than Bitcoin.
Tokens are what new cryptocurrency firms issue through an ICO (Initial Coin Offering) in return for either liquid cash or other established digital currencies. The tokens that are issued are expected to become currency units if the project’s targets are met and the firm launches successfully and can be used for paying platform fees, making trades, and using services on the new platform.
The ICO acronym stands for Initial Coin Offering. It’s similar to an IPO (Initial Public Offering) in the stock world. It’s a method by which new start-ups raise capital from the public. Unlike IPOs, ICOs are oftentimes unregulated.
FOMO is slang for ‘Fear Of Missing Out.’ It is often associated with irrational behaviour from traders who worry that they’re missing out on a great opportunity and therefore jump hastily into any investment opportunity. Simply put, it’s the fear of being left behind while others are reaping benefits.
Pump and Dump
A pump and dump occurs when cryptocurrency prices are artificially inflated through false positive statements. The goal of a pump and dump is to increase prices to create cryptocurrency demand from traders, giving those behind the pump and dump the opportunity to dump their crypto holdings for profits.
Market capitalization represents the total value of a cryptocurrency. The value of a coin’s market cap is calculated by multiplying the current price of one unit of the crypto asset or token by its total supply.
HODL is a term that was born out of a Bitcoin forum’s drunken typo of the word ‘hold.’ GameKyuubi, who made that mistake, initially wanted to write that “I am holding” on the Bitcoin forum but ended up writing ‘I AM HODLING.’ The term later came to refer to ‘Holding On for Dear Life.’ Today, the term is used by traders who intend to hold onto their cryptocurrency assets during a bear market in the belief that only those who keep their stash will eventually succeed in the future.
This is an acronym used to refer to ‘Do Your Own Research.’ Due to the increasing number of exit scams, fake ICOs, and pump and dump hype in the crypto-trading industry, traders have long been advised to conduct their own due diligence before investing in any coin or project.
REKT is cryptocurrency slang for ‘wrecked.’ It is usually used when a cryptocurrency market crashes. The term traces its origins from a Reddit user who once asked users for a moment of silence after a major Bitcoin price crash.
Mooning is a term used by crypto traders to state that a particular coin is about to rise in value. It’s a term coined from the phrase ‘to the moon.’
BTFD (Buy The Fricking Dip)
BTFD is a term used a lot in the crypto-trading industry. Its meaning is literal. If you want to profit, you have to purchase a token at its lowest price and sell it when its price increases.
While trading in the cryptocurrency market is both fun and lucrative, as a novice trader, you first need to understand the ins and outs of the industry. The market is both highly volatile as well as risky for anyone without knowledge of the market or an inability to read and understand the charts. The above list will hopefully help you understand the basics of cryptocurrency trading and get started with DYOR and eventually HODLing for the long run!