Crypto Trading Terminology
Crypto Trading Terminology
Limit: A set number that we want to enter our play at and no other number.
Market: Enter the trade at whatever price the asset is at in that given time.
Long (Buy): We are predicting the asset will go UP.
Short (Sell): We are predicting the asset will go DOWN.
TP: Take Profit - this is where the analyst has instructed you to sell part of your position at. There are usually 1 - 3 or more TP's but you can also take your profit if you are happy with the number. Ultimately profit taking is different for everyone and we cant tell you when to TP just some guidelines!
SL: Stop loss - This is a number we enter at an invalidation point. If your trade hits your SL then it will close out saving you from going deeper into the hole.
BE: This means your trade is at BREAK EVEN which is your entry.
Leverage: Leverage is the ability to increase your overall buying power. As a new trader we HIGHLY recommend not going over 3-5x leverage even if an analyst is using more. They are more experienced. If you have $100 and use a 5x leverage, that $100 becomes $500 which allows you to buy more coins for your position. The higher the leverage you use, the less capital you are allowed to use and the less breathing room you have. The higher the leverage the greater your chances are in getting liquidated.
Liquidation: When trading futures you will have a liquidation when you enter a trade. Your position size and leverage will direct how close your liquidation is to your entry on a trade. The higher your leverage and the more % of your portfolio you use the closer your leverage will be to your entry making it a much riskier play. If your trade gets liquidated you will be forced to close the trade and lose all the money you put into the trade depending on your trading
Isolated Mode: Isolated Mode is ½ trading modes and the one all beginners should use. Isolated mode only uses the amount of money in your position as collateral. This means if you get liquidated then you only lose the amount of money in your trade. On Isolated mode you can only increase your leverage, be careful once you increase it you cannot decrease it. Reason beginners use Isolated mode is to save their portfolio in case of a liquidation.
Cross Mode: Cross mode is 2/2 trading modes you can use. Cross mode will use your entire Futures wallet portfolio as collateral against your trades which means if you get liquidated then you will lose your ENTIRE futures portfolio not just what was in the trade. Your SPOT portfolio is unaffected. Perks of cross mode are you can increase and decrease your leverage in a trade and you will have more breathing room with your liquidation since your whole wallet is used as collateral.
Spot Bags: Long term holdings. We move our profits from futures into our spot bags to buy more long term coins to allow our money to grow over time.
Hedge Mode: This is a preference customization allowing you to Long AND Short the same coin. Must be in Cross mode to apply.
VC: A venture capitalist is a person or group who makes investments in companies or projects in exchange for an equity stake. Venture capitalists target projects that are at looking to commercialize their idea. When a project is backed by very reputable VCs, it means that the project has a good possibility of being a great investment opportunity.
LAUNCHPAD: Launchpads allow investors to buy into new cryptocurrency projects before they are released to the public. They have a vetting process in place to avoid scams and rug-pulls. This means that the exchanges with launchpads will do multiple research before commencing a sale.
IDO: Initial dex offerings are tokens that represent any type of asset on a decentralized exchange (DEX). In an IDO, a blockchain project makes a coin's first public debut on a DEX in order to raise funding from retail investor. Normally, IDOs have access to immediate trading compared to ICOs and IEOs. It also provides immediate liquidity and is more attractive to projects that don't have huge backing as it is cheaper to list on a DEX than a centralized exchange (CEX).
IEO: Initial exchange offerings is a fundraising event that is administered by an exchange. This is another term that is used when talking about launchpads. The exchange will conduct most of the research and do most of the publicity for the token.
ICO: Initial coin offering is a fundraising that is administered by the project's own team. Contrary to an IEO or IDO, it is strongly recommended to do research before investing into an ICO as these are riskier than IEOs or IDOs.
BMIC: BMIC is a slang used when talking about a big move incoming for BTC. This move could be up or down depending on news, technical analysis. Majority of the time, it is recommended to stay still and not force any trades.
BVOL: BVOL is the ticker used for the Bitcoin Historical Volatility Index chart. When BVOL is mentioned, there's a high probability that BMIC is mentioned which as well means that it is recommended to not force any trades and to preserve capital.
RUNNERS: Runners are a small portion of your portfolio that has been left in a trade. This usually happens after taking profits and not wanting to close the trade in case the coin's value keeps going up. Runners are only there when the trade is now considered risk-free.
SCALING: Scaling into a trade is a strategy used to have a favourable position into a trade. It consists of having multiple orders at different prices to have a good average entry price and to avoid putting in one big order. This could be considered as DCAs (Dollar-Cost Averaging) when a trade is given. Scaling out, on the other hand, means that the investor will partially close out a trade a little at a time. This could be considered as TPs (Take Profit) when a trade is given.
ALTCOIN: Altcoins are cryptocurrencies other than bitcoin. This includes the likes of ETH, ADA, XRP, SOL, DOT, DOGE and much more.
STABLECOIN: Stablecoins are cryptocurrencies that offer a stable price and are backed by a reserve asset. They could be pegged to a currency like the U.S. dollar or to a commodity such as gold. U.S dollar = USDT. Gold = PAXG.
MICRO CAPS: Micro cap coins are cryptocurrencies with a rather small market cap. This is a coin which market cap is usually below $200 million. These coins are considered risky to invest in as they are more volatile than a coin with a big market cap. On the other hand, they have the potential for big rewards.
BLUE CHIPS: Blue chips coins are cryptocurrencies that are very good projects with strong fundamentals that will be successful in the future.
SCALP: Scalping is a trading strategy which aims to make small and frequent profit, with the goal being to generate a substantial return by the end of the day, week. These are usually short-term trades that heavily depend on market condition.
SWING: Swing trading is a style of trading that involves taking trades that last a couple of days up to a few weeks. This is done to be able to profit from an anticipated move in a coin's price.
STOP LIMIT: Stop-limit order is an order to buy or sell a coin that combines the features of a stop order and a limit order. This means that once the stop price is reached, the stop-limit order becomes a limit order, and it will be executed at a specified higher or lower price depending on the order type.
DCA: Dollar-cost averaging is a strategy that involves spreading purchases across predefined intervals. Just like scaling in, it consists of placing multiple orders at different prices to take advantage of a better entry price. DCA is the acronym that will be seen on trades.
STARTER POSITION: A starter position is the idea of opening a trade, but not as large of a position as one eventually intends to have. Meaning that instead of putting 100% of your intended capital into a trade, you will only go in with 10-25%. This will give you a lot of room to breath and more room to DCA
DEX: Decentralized exchange is a peer-to-peer(P2P) exchange that allows users to trade cryptocurrency without the need for an intermediary. A DEX offers anonymity and non-custodial transactions. This means there is no KYC to be able to trade in these exchanges.
DeFi: Decentralized finance is a system by which financial products (lending, borrowing, passive income on your assets) become available on a decentralized blockchain network. DeFi makes it possible for buyers, sellers, lenders, and borrowers to interact P2P without the need of a middleman. Contrary to banking, DeFi is open to anyone, and you do not need to do KYC to have access to it.
TVL: TVL is an acronym to Total Value Locked. TVL represents how much of an asset is being staked in a specific protocol. This is mostly used in DeFi to measure the overall health of the DeFi market. This is also a tool used to determine if an asset is undervalued or overvalued. There are three main factors that are taken into consideration when calculating and looking at decentralized financial service's market cap TVL ratio: calculating the supply, the maximum supply as well as the current price.
CEX: Centralized exchange is a cryptocurrency exchange that is operated by a company. Most centralized exchanges offer trade on margin, trade both crypto/crypto and fiat/crypto pairs. Contrary to DEX, the buyers and sellers trust a middleman to help them hold their money and offer security and monitoring. In centralized exchanges, the buyers do not own the right to the coins they buy as they do not have a private key on their wallet.
Blockchain: Blockchain is a specific type of database. Blockchains store data in blocks that are chained together. Once the block is filled with data it is chained onto the previous block, which makes the data chained together in chronological order. The most common use for blockchains so far has been a ledger for transactions.
Layer 0: Layer 0 protocol is the first layer among all blockchain protocols. Layer 0 protocol can be used across several use cases, including data validation, setting up individual reward structures, digital currency wrapping and more. It is a root layer which allows cross-chain interoperability with all layers 1 protocols.
Layer 1: Layer 1 blockchain is a set of solutions that improve the base protocol itself and will make everything more scalable.
Layer 2: Layer 2 solutions are made to increase the speed and efficiency of blockchains. This is a way to handle transactions of a main net while taking advantage of the security model of the main net. Layer 2 built on top of layer 1 protocol tend to have cheaper transaction fees than the main net it's being built on.
CAPITULATION: Capitulation is the process of selling a cryptocurrency at a loss because the price has dropped so much that the trader, investor either loses hope or panic sells. This kind of a sell-off could negatively affect the market.
PA: Price action. The acronym PA is used when talking about a coin's price movement whether it's an upwards or downwards movement.
FOMO: Fear of missing out. When it comes to crypto, FOMO is feeling an urgent need to get in on a coin for the simple reason that the investor believes the price is about to hike.
FUD: Fear, uncertainty, and doubt. FUD in cryptocurrency is a psychology trick used to spread doubt and fear which could cause a sell off in the market. It could be news from around the world as well as doubt in a certain project and it comes with the intent of causing fear around the crypto space.