A 51% attack refers to an attack on a blockchain by a group of miners controlling more than 50% of the network’s mining hash rate or computing power. The attackers would be able to prevent new transactions from gaining confirmations, allowing them to halt payments between some or all users. They would also be able to reverse transactions that were completed while they were in control of the network, meaning they could double-spend coins.
An accredited investor is an individual or business entity with special status under financial regulatory laws. The definition of an accredited investor, and the consequences of being classified as such, vary between countries. Generally defined as a person or entity who is allowed to deal, trade, and invest in financial securities not available to the general public as long as they satisfy one (or more) requirements regarding income, net worth, asset size, governance status or professional experience. Sometimes this class of investor is called a Sophisticated Investor.
Accumulation can take on several meanings in finance. In terms of an individual trader or trading entity, accumulation refers to increasing the overall position size in a particular asset over multiple transactions with the intent of selling it at higher prices (known as distribution). Market participants with large amounts of capital employ this strategy to create their positions in an effort to avoid moving the market too much. Accumulation can also refer to the overall addition of multiple positions to a portfolio. Accumulation is also defined as a general increase in buying activity of a given asset. In this case, the asset is said to be “under accumulation” or “being accumulated”.
Cryptocurrency addresses are used to send or receive transactions on the network. They are hexadecimal strings which represent the unique ID of a wallet on the block chain. It is analogous to an account number.
An airdrop is the process of distributing free cryptocurrency to multiple qualifying wallet addresses. This is often done as a marketing technique by new cryptocurrency projects with the intent of gaining attention and creating more demand. Airdrops are subject to taxation in some countries.
Algorithmic trading is the use of process and rules-based algorithms to employ strategies for executing trades, often employing computers programmed to take certain actions in response to the output of the algorithm. (See also System/Systems Trading)
An altcoin is defined as any cryptocurrency other than Bitcoin. “Altcoin” is a combination of two words: “alternative Bitcoin” or “alternative coin”.
An initialism for “Anti Money Laundering”. AML is a defined as a set of laws designed to prevent converting illegally earned money into what appears to be legally earned money. (See also KYC)
Arbitrage is the simultaneous purchase and sale of an asset to profit from an imbalance in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets. Arbitrage is the process of buying something for a low price in one market and selling it in another for profit in a very short period of time, exploiting inefficiencies in a given market. Arbitrage can be done with virtually any product including cryptocurrencies.
An acronym for “Application Specific Integrated Circuit”. ASICs are silicon chips specifically designed to do a single task. In the case of bitcoin, they are designed to process SHA-256 hashing problems to mine new bitcoins. (See also Mining)
Ask or Asking Price
The ask or asking price is the price at which an asset is offered by the seller. The price at which Market Buy orders will be filled.
Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon.
An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Common examples of asset classes are Stocks, Commodities, Bonds, Real Estate and Cryptocurrencies.
Assets are tangible or intangible items obtained for producing additional income or held for speculation in anticipation of a future increase in value. Assets are resources with economic value that an individual, corporation or country owns or controls with the expectation that it will provide a future benefit. Assets are reported on a company’s or individuals balance sheet and are bought or created to increase their value or benefit the firm’s operations.
An initialism for “All Time High”. The highest price an asset has ever been.
Atomic swap is a peer-to-peer exchange of cryptocurrencies from one party to another, without going through a third party service like a crypto exchange. During this entire process, the users have full control and ownership of their private keys. To put it in simple terms, atomic swaps will enable people to directly trade with one another wallet-to-wallet.
An initialism for “Average True Range”. ATR is a technical analysis indicator that measures market volatility by decomposing the entire range of an asset price over a specified period of time.
A “bag” is generally defined as a large amount of a given asset although the size of the bag is completely subjective to the individual or entity.
Bag holder is defined as an investor who continues to hold onto their asset even though the price is dropping, sometimes approaching $0, often with the hope that it will increase in value over time.
Base Currency or Base Pair
The base currency or base pair is the first currency listed in a traded currency pair. It compares the values between the first currency and the second currency in the currency pair. Examples: BTC/USD, ETH/BTC, USD/EUR, AUD/JPY
A “bear” is an investor or trader who believes that the price of an asset or the market overall will decline. These individuals and entities often seek to profit from these price moves by selling at a higher price and buying them back at lower prices, realizing an overall gain. The term was created in relation to the way a bear attacks, by swiping down with it’s claws, sending prices down.
A “bear market” is a prolonged downward trend of a traded asset class. This is the opposite of a Bull Market.
A bear trap is a technical pattern that occurs when the performance of a cryptocurrency, stock, index or other financial instrument incorrectly signals a reversal of a rising price trend. A bull trap denotes the opposite of this phenomenon, in which a false reversal of a declining price trend takes place. In either case, these traps can tempt investors into making decisions based on anticipation of price movements which do not end up taking place.
A bear trap fools a bearish investor expecting to profit from the dropping prices of a given asset. A bear trap is a false impression that the prices are dropping causing a bearish investor to try to take advantage of that. The price then reverses, going back up, usually resulting in an unprofitable trade.
A bid is an offer made by an investor, trader, or dealer in an effort to buy a security, commodity, or currency. It is also the price at which Market Sell orders will be filled.
Bid Ask Spread
The bid ask spread is the amount by which the asking price exceeds the bid price for the asset in a given market. The bid-ask spread is essentially the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept. (See Spread)
An acronym for “Bitcoin Improvement Proposals” which can be submitted by anyone who wants to improve the Bitcoin network.
A blockchain is a digital ledger in which transactions made in bitcoin or other cryptocurrency are recorded chronologically and publicly. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.
The block reward is a reward given to miners for each block created in a blockchain. This is an incentive reserved for solving the mathematical problem linked to the block. Different kinds of cryptocurrencies give out block rewards with different values. For example, the reward for mining a Bitcoin block is currently 12.5 bitcoins per block mined, which halves every 210,000 blocks, currently expected to occur in the week commencing 18 May 2020, when the number of blocks hits 630,000.
Blocks are packages of data that carry permanently recorded data on a blockchain network.
Blow off Top
A blow-off top is a chart pattern showing a steep and rapid increase in price and trading volume followed by a similarly steep and rapid drop in price.
Blue Sky Breakout
A blue sky breakout refers to the new high price territory that an asset trades up into as it clears at least three months of prior price highs.
Bollinger Bands® is a technical analysis tool defined by a set of lines plotting two standard deviations (positively and negatively) away from a simple moving average (SMA) of the traded assets price. This can be adjusted to user preferences. Bollinger Bands® were developed and copyrighted by famous technical trader John Bollinger.
Book is the overall summary of a trader’s positions.
Book Value is the measure of all of a company’s assets: stocks, bonds, inventory, manufacturing equipment, real estate, etc. In theory, book value should include everything down to the pencils and staples used by employees, but for simplicity’s sake, companies generally only include large assets that are easily quantified minus their liabilities.
Brain wallet refers to the concept of storing Bitcoin in one’s own mind by memorizing a seed phrase. If the seed is not recorded anywhere, the Bitcoin can be thought of as being held only in the mind of the owner.
A breakout is the movement of the price of an asset through an identified level of support or resistance. Breakouts are used by some traders to signal a buying or selling opportunity.
An initialism for “Buy The F******* Dip”. The price of assets go up and down, BTFD is an expression used by market participants to buy when the price drops to lower prices or a perceived level of support.
A bull is an investor or trader who believes that the price of an asset or the market overall will increase. These individuals and entities often seek to profit from upward price moves by buying at a low price and then selling them at a higher price. The term was created by the way a bull attacks, swinging his big horned head upwards rocketing prices upwards.
Bull market is a prolonged upward trend of a traded asset class. This is the opposite of a Bear Market.
Bull trap is a false signal, referring to an increasing trend in a cryptocurrency, stock, index or other asset that reverses after a convincing rally and then breaks a prior support level. The move”traps”traders or investors that acted on the buy signal and generates losses on resulting long positions. A bull trap may also refer to a whipsaw pattern.
A bull trap is set by investors/traders in a financial instrument, like crypto, stock or a commodity, who will buy large amounts in order to artificially drive the value upward, or create a false sense of a bull market or bull run. Traders who are fooled by the bull trap will often buy the asset at the inflated price, in the belief that the upward trend will continue. Unfortunately, those who fell into the bull trap will often be left holding assets for which they paid for at the artificially inflated price, since once the trap is released, the market evens out, and sometimes even drops, resulting in a loss for those who fell for the trap.
A buy wall is an order block composed of a large enough amount of limit order bids such that price is unable to continue depreciating.
A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period.
Candlesticks or Candles are defined as a representation on a chart used to show changes in price over time. A traditional candle provides 4 points of information, the opening price, the closing price, the high, and the low. Other forms of candlesticks are Heiken Ashi and Renko which use different variables to determine the candle.
Candlestick patterns come in many forms. They are commonly used to identify an asset’s predicted movement. Some examples of commonly traded Candlestick Patterns are Three Black Crows, Evening Star, and Abandoned Baby.
Capital is a term for financial assets, such as funds held in deposit accounts and funds obtained from special financing sources. Capital may also be referred to as anything of value one owns including software, cars, and buildings that contribute to building wealth.
Capitulation is when investors give up any previous gains in a security or securities by selling as prices fall. It is often used as a term to identify an area of the market where all potential sellers have sold. This is the definition of a market bottom, as once all sellers have sold there is nothing left but buyers. Traders and Investors can only identify capitulation after it has occured.
The Cash Price is the actual amount of money that is exchanged when assets are bought and sold in the real world.
Cash Settled Futures
A cash settlement is a settlement method used in certain futures and options contracts where, upon expiration or exercise, the seller of the financial instrument does not deliver the actual (physical) underlying asset but instead transfers the associated cash position or cash value of the underlying asset.
A ledger maintained by a central agency.
A initialism standing for “Contract for Differences”. A CFD is a marginable financial derivative that can be used to speculate on price movements for a variety of underlying instruments. A contract for differences is an arrangement made in financial derivatives trading where the differences in the settlement between the open and closing trade prices are cash-settled. There is no delivery of physical goods or securities with CFDs. CFDs are not allowed in the US.
Charting is a colloquial term for the use of various technical analysis tools and techniques drawn directly onto a price chart.
Circulating supply is the number of coins or tokens currently available and are in the hands of people. Coins that are locked, reserved or not able to be sold and traded are not included in the circulating supply.
An initialism for “The Chicago Mercantile Exchange”. The CME is a futures exchange which trades in interest rates, currencies, indices, and agricultural products.
Coin age is a term used in a PoS system, where validators are given the right to forge a block based on the coin age of their stake. Coin age is determined by how many idle days old the stake is, multiplied by the amount of coin at stake. If the validators stake is idle for 30 days or more, they may be selected to forge the next block. The bigger and more idle the validators stake is, the better the chance of being selected (versus in a PoW system, where your hash power is the determining factor). Once a stake forges a block, the coin age gets reset back to 0 (and must wait 30 days for the chance to forge another block. Coin age has an age-cap of 90 days to help level the playing field for other validators.
Cold storage is storing crypto away from the internet. Meaning on a paper wallet, in a hardware wallet, on an air-gapped machine or in a “Brain Wallet”. This would be the opposite of a hot wallet or hosted wallet, which is connected to the web for day-to-day transactions. The purpose of using cold storage is to minimize the chances of your cryptocurrency being stolen from a malicious hacker and is commonly used for larger sums of cryptocurrency.
A commission, in financial services, is the money charged by an investment advisor or broker for giving advice and making transactions on behalf of a client.
Confirmation (in blockchain)
Confirmation is defined as a type of proof that a transaction was recorded and verified on the blockchain. The higher the number of confirmations, the more trusted that transaction is.
Confirmation (in crypto transactions)
A transaction is confirmed when it has been verified by miners on the blockchain. It is the successful act of hashing a transaction and adding it to the blockchain.
Confirmation (in trading)
Confirmation on a chart refers to several data points confirming, or lending credibility, to the validity of a technical pattern or trend on a price chart.
Confirmation bias is the tendency to search for and overweight evidence that supports one’s own position or beliefs. This can be a major problem in trading, as it leads traders to become overconfident in their positions and stay in trades well after they should be abandoned. Confirmation bias suggests that investors seek out information that confirms their existing opinions and therefore, often leads them to ignore contrary information that refutes that belief.
Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.
Consolidation is a technical analysis term referring to security prices oscillating within a corridor and is generally interpreted as market indecisiveness.
Contract is defined as a spoken or written agreement between two or more people.
A counterparty is the other party that participates in a financial transaction, and every transaction must have a counterparty in order for the transaction to go through. More specifically, every buyer of an asset must be paired up with a seller who is willing to sell and vice versa.
Counterparty risk is the likelihood or probability that one of those involved in a transaction might default on their contractual obligation.
An initialism for “The Consumer Price Index”. The CPI measures the average change in prices over time that consumers pay for a basket of goods and services.
A crash is a sudden and significant decline in the value of a given market. A crash is most often associated with an inflated stock market but can happen in any market for a number or reasons.
Cross margining is the process of offsetting positions whereby excess margin from one account is transferred to another to maintain the required margin. Currently in cryptocurrency, Cross Margin means that one’s entire account balance can and will be used as collateral for one’s position.
ICO is an initialism for “Initial Coin Offering”. They are the cryptocurrency equivalent of an IPO (Initial Public Offering in traditional stock markets). Either all or some of a currency is sold at a certain time to raise money for development. Other rules and things apply and it varies from ICO to ICO. Be wary of ICOs, many ICOs have little to no work done yet and don’t deserve your money – please do a proper assessment before buying in to an ICO.
Cryptography is the practice and science of techniques for securing information through encryption and decryption. Cryptography makes ordinary information unreadable without the correlated decrypting solution.
A currency pair is the quotation of one currency against another.
And initialism for “Decentralized Autonomous Organizations”. DAO can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules.
An abbreviation for “Decentralised Application”. A DAPP is an application that is open source, operates autonomously, has its data stored on a blockchain or other decentralized ledger, incentivised in the form of cryptographic tokens and operates on a protocol that shows proof of value.
Day trading involves making many trades in a single day. Day traders typically do not keep any positions or own any securities overnight. For traditional stocks, The Financial Industry Regulatory Authority (FINRA) in the U.S. established the”pattern day trader”rule, which states that if a stock-trading customer makes four or more day trades (opening and closing a stock position within the same day) in a five-day period, the customer is considered a day trader and must maintain a minimum account balance of $25,000.
An initialism for “Dollar Cost Averaging”. DCA is the purchasing strategy of regularly procuring a fixed dollar amount of a specific investment, regardless of the share price, with the goal of limiting the impact of price volatility on the investment.
An initialism for “Distributed Denial Of Service” attack. DDoS is an intentional cyberattack carried out on networks, websites, and online resources to restrict access to its users.
A decentralized exchange, also referred to as a “DEX”, is a cryptocurrency exchange which operates in a decentralized way, i.e., without a central authority. Decentralized exchanges allow peer-to-peer trading of cryptocurrencies.
A Decentralized Market utilizes technology to enable investors to deal directly with each other instead of operating from within a centralized exchange. Virtual markets that use decentralized currency, or cryptocurrencies, are examples of decentralized markets. The Forex market is another example of a decentralized market as there is no physical location where investors buy and sell the assets.
An abbreviation for “Decentralized Finance”. DeFi is the emerging movement that leverages decentralized networks to transform traditional financial products into trustless and transparent protocols that run without intermediaries.
Deflation is the opposite of inflation which tends to decrease the purchasing power of a currency, deflation tends to result in an increase in the purchasing power of a currency. Bitcoin is a deflationary currency because the amount of new Bitcoin created with every mined block is reduced every four years at the block halving.
Depreciation is the reduction in the value of an asset over time. In finance, it is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value over time.
A derivative is a securitized contract between two or more parties whose value is dependent upon or derived from one or more underlying assets. Its price is determined by fluctuations in that asset, which can be stocks, bonds, currencies, commodities, or market indexes.
Devaluation is the deliberate downward adjustment to the value of a country’s currency relative to another currency, group of currencies, or standard.
(See Decentralized Exchange)
A Dip is a corrective drop in price during upward market movements.
A discretionary trade is a type of trade predicated upon one’s own personal evaluation of market conditions, as opposed to an algorithmic or systems based trade which is predicated upon a predetermined strategy in response to market conditions. (See also Algorithmic Trading)
A distributed ledger can be described as a ledger of any transactions or contracts maintained in decentralized form across different locations and people, eliminating the need for a central authority to keep a check against manipulation. All the information on it is securely and accurately stored using cryptography. Assets can be securely transacted using keys and cryptographic signatures. It is a database that is consensually shared and synchronized across multiple sites, servers, institutions or geographies.
Distribution Phase is a phase of the Wyckoff Market Cycle. The distribution phase begins as the markup phase ends and price enters into a consolidation range. In this consolidation range, previous buyers are selling their positions onto new buyers. This is the opposite of the accumulation phase. During distribution, sellers want to maintain higher prices until their positions are sold.
Divergence is when the price of an asset and a technical indicator, typically a momentum oscillator, move in opposite directions. Divergence is a warning sign that the price trend is weakening, and in some cases may result in price reversals.
Diversification is an investment approach, specifically a risk management strategy. Following this theory, a portfolio containing a wide variety of assets in different classes poses less risk and ultimately yields higher returns than one holding highly correlated assets.
A drawdown is a peak-to-trough decline during a specific period of time for an investment, fund, or trading account. Drawdowns help assess risk, compare investments, and are used to monitor trading performance.
Dust is a very small amount of cryptocurrency. The value of dust is so small it cannot be transacted on the blockchain because the cost of transaction would be more than the value of the amount of currency being transacted.
An initialism for “Do your Own Research”.
An edge is a trader’s specific advantage over other market participants such that their likelihood of profiting from a trade, or series of trades, increases. An edge can take various forms: statistical edge, trading execution edge, information edge, data processing edge, etc.
Elliott Wave Theory
Elliott Wave Theory is a method of technical analysis that looks for recurring long-term price patterns related to repeating changes in investor sentiment and psychology. This theory is predicated on the idea that the market is composed of waves of investor sentiment, characterized as impulse waves that begin and continue in a pattern, and corrective waves that oppose the larger trend of the initial pattern.
An initialism/acronym for “Exponential Moving Average”. (See Moving Average)
Entry point refers to the price at which a trader buys or sells (opens) a position. Entries for any given trade can be taken at one price point giving one entry point, or a series of entry points which when averaged, give the true entry point for that trade.
Equity is the ownership of assets minus the liabilities associated with those assets. For example, if margin is used to borrow many shares of a stock, the overall account equity has not changed because the liabilities have increased along with the increase in assets.
Equity can also refer to the amount of shares/percentage ownership of a company.
ERC20 is the standardized protocol for the creation of digital asset tokens on the Ethereum blockchain.
An escrow contract is a transaction in which a spender and receiver place funds in a 2-of-2 (or other m-of-n) multisig output so that neither can spend the funds until they’re both satisfied with some external outcome.
An exchange is where one buys and sells a traded commodity. Examples: GDAX, Poloniex, Kraken, Oanda, NYSE etc.
The exchange rate is the value of one currency versus the value of another currency. (See Base Pair and Quote Pair)
An exit or exit point is the price or series of prices at which a trader closes a position. A trader may sell or buy at an exit point, depending on if they were long or short on that trade.
Fading is a trading term referring to shorting a breakout or longing a dump, expecting a price reversal instead of a continuation. Usage: “I faded that false breakout on XVG and made a killing!”
Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity.
The Fibonacci retracement tool is used in technical analysis (charting) that attempts to identify areas of support or resistance. Fibonacci retracement levels use horizontal lines, based on the Fibonacci Sequence, to indicate where possible support and resistance levels are. Each level is associated with a percentage. The percentage is how much of a prior move the price has retraced. The Fibonacci retracement levels are 23.6%, 38.2%, 61.8% and 78.6%. While not officially a Fibonacci ratio, 50% is also used.
A Fill is the action of completing or satisfying an order and occurs when the other side of your entry or exit is executed against and/or when your limit entry or exit are market bought or sold into.
Fill or Kill
Fill or Kill (FOK) is a type of conditional limit order that tells the exchange that the order in place must be executed immediately and completely, or not at all. The order is typically cancelled within a few seconds if it is not able to be fully completed. Fill or Kill is usually reserved for large orders of a stock or commodity because keeping such a large order in place for a longer period of time would likely disrupt the price of the asset and potentially disrupt the market.
To flip is the action of changing your position in the market from long to short or vice versa, rather than merely exiting a position to flat.
An acronym for “Fear Of Missing Out”. FOMO is the colloquial term for the emotion that drives individuals to take trades because of the anxiety produced by market movements that one is not actively participating in.
An abbreviation for “Foreign Exchange”. Forex (FX) is the marketplace where various national currencies are traded.
Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network.
Front-running is when a broker or other entity enters into a trade because they have foreknowledge of a big non-publicized transaction that will influence the price of the asset, resulting in a likely financial gain for the broker. It also occurs when a broker or analyst buys or sells shares for their personal account ahead of their client’s accounts. Front-running is illegal and unethical.
FTX is a cryptocurrency derivatives exchange that allows spot, futures, options, and leveraged token purchases for both long and short positions.
An acronym for “Fear, Uncertainty and Doubt”. FUD is used to describe the malicious spread of negativity. This is often done with the goal of causing a negative impact to the asset’s price.
A Full Node is a computer connected to a blockchain network that runs a complete copy of the blockchain and is able to validate and confirm transactions.
Fundamental Analysis (FA)
Fundamental analysis is a method of valuing a security or asset which entails attempting to measure its intrinsic value by examining related economic, financial, and other qualitative and quantitative factors.
The funding rate is a time-based trading fee based on market position in a crypto derivatives perpetual futures contract. It’s a mechanism to drive the derivative price towards the index price, with longs paying shorts or shorts paying longs depending on the direction of the derivatives price divergence from spot price.
Futures contracts are financial products that derive their value from an asset’s spot value, with a speculative discount or premium applied based on contract delivery date. For this reason perpetual swaps/contracts, also known as inverse contracts, tend to mirror spot price more closely than futures contracts as they do not have an expiration or delivery date.
A gap is the price range where an asset was not traded between the close of one timeframe’s candle to the next.
A gap fill is a market mechanism by which price will seek to trade within a recent, previous market gap.
Gas is the name for transaction fees on the Ethereum network based on the amount of computational power required to execute a smart contract or to send ethereum or ethereum based tokens from one wallet address to another. Other blockchains utilize specific Gas tokens to pay for transactions and smart contracts on their blockchains. Examples of this are Neo Gas, Ontology Gas, etc.
The Genesis Block is the very first block in a blockchain.
Good till Canceled
Good till Cancelled is the most common type of limit order. This type of order stays on the books indefinitely until it is filled or manually cancelled.
Gwei is an abbreviation for “gigawei”. Gwei is the smallest denomination (one-billionth) of an Ethereum token. This is the typical ethereum denomination used when referring to ETH Gas payments. A gwei is similar to a Satoshi, which is worth one hundred-millionth of a Bitcoin.
Halving is a reduction in the block reward given to miners. Bitcoins have a finite supply, which makes them scarce. The total amount that will ever be issued is 21 million. The number of Bitcoins generated per block is decreased by 50% every 210,000 blocks, which happens every four years. This is called “halving.” The final halving will take place in the year 2140.
Hard cap is the maximum amount of capital/money a cryptocurrency project can receive from investors in its Initial Coin Offering (ICO).
A hard fork is a type of blockchain fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol’s software.
A hardware wallet is a cryptographically secure piece of hardware designed to keep cryptocurrency wallet information secure, e.g. Trezor Wallet, Ledger Nano, etc.
Hashrate is the number of hashes that can be performed by a bitcoin miner in a given period of time (usually a second).
Hedging is a strategy for mitigating risk in a trade by taking an opposing position on the same asset, or in a correlated asset.
Heiken Ashi Candle
Heiken Ashi is a candlestick style that averages OHLC4 data to produce candles that show the overall market trend rather than focusing on individual time frame closes and price data.
HODLING is the act of buying and holding a cryptocurrency. A play on the word “hold”, this term stemmed from a typo during a rant from a drunk author on the BitcoinTalk forum (https://bitcointalk.org/index.php?topic=375643.0). This term is now also used as an acronym for “Hold On for Dear Life”.
A hot wallet is a cryptocurrency wallet that has an active connection to the internet. These are used for “everyday” transactions and should never hold large amounts of cryptocurrency, since their connectivity reduces their security.
And initialism for “High Volume Node”. A HVN is a historically driven volume profile, typically created during periods of market consolidation.
The Ichimoku Cloud is a multi-faceted technical analysis trading indicator that overlays onto a chart. It is used to show support and resistance, momentum, and trend direction (time frame dependent).
An initialism for “Initial Coin Offering”. An ICO is when a new coin/token is being sold at a base price before the launch of the service it is associated with, similar to an IPO for corporations in the traditional markets. ICOs are frequently used for developers of a new cryptocurrency to raise capital.
An initialism for “Initial Exchange Offering”. An IEO is similar to an ICO in that it seeks to raise capital for a cryptocurrency project. The difference between an IEO and an ICO is that an IEO is supervised by a partnering exchange and is only available to the users of that exchange.
Illiquid as it pertains to an asset, is defined as one that can not be converted easily to cash. For a market, it is one that has low trading activity, few market participants, or thin order books.
Immutable is the property of being unchanging or unable to be changed. Specifically referencing the temporal permanence of blockchain data (Bitcoin in particular).
An Index fund is a type of mutual fund. It’s portfolio is constructed to match or track the components of a financial market index, such as the Standard & Poor’s 500 Index (S&P 500). An index fund is said to provide broad market exposure, low operating expenses, and low portfolio turnover.
An indicator is a technical analysis tool that performs mathematical operations on price and volume data in an effort to gain additional information, and therefore an edge, on the analyzed market.
Indices are hypothetical portfolios that track a sector of the traditional stock market. Dow, Nasdaq, and S&P 500 are examples of market indices. While tradable with derivative products or index mutual funds, indices are not assets that one can actually own.
Initial margin is the money or collateral used to open a leveraged position on an asset.
Intraday trading is the market activity and trading styles that occur beneath the Daily time frame.
Isolated margin is a property of leveraged trades such that only the initial margin used to open the position is put at risk. This differs from a standard margin position in which your account balance is also used to secure the borrowed assets for your leveraged position.
JPY is the ticker symbol used in the Forex market for the Japanese Yen.
The Kelly criterion is a mathematical formula relating to the long-term growth of capital developed by John L. Kelly, Jr. The term is often also called the Kelly strategy, Kelly formula or Kelly bet, and the formula is as follows:
Where: Kelly % = Percent of investor’s capital to put into a single trade
W = Historical win percentage of trading system
R = Trader’s historical win/loss ratio
There are two key components to the formula for the Kelly criterion: the winning probability factor (W) and the win/loss ratio (R). The winning probability is the probability a trade will have a positive return. The win/loss ratio is equal to the total positive trade amounts, divided by the total negative trading amounts. The result of the formula will tell investors what percentage of their total capital that they should apply to each investment.
Keynesian economics is an economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression. Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression.
Monetarist economics is Milton Friedman’s direct criticism of Keynesian economics theory. Simply put, the difference between these theories is that monetarist economics involves the control of money in the economy, while Keynesian economics involves government expenditures. Monetarists believe in controlling the supply of money that flows into the economy while allowing the rest of the market to fix itself. In contrast, Keynesian economists believe that a troubled economy continues in a downward spiral unless an intervention drives consumers to buy more goods and services.
The Kijun Line, also called the Base Line or Kijun-sen, is one of five components that make up the Ichimoku Cloud indicator. The Kijun Line is typically used in conjunction with the Conversion Line (Tenkan-sen) to generate trade signals when they cross. These signals can be further filtered via the other components of the Ichimoku indicator. The Kijun Line is the mid-point of the high and low price over the last 26 periods.
Kiwi is the common name for the New Zealand Dollar (NZD) in Forex trading.
An initialism for “Know Your Customer/Client”. KYC is the government-mandated practice of collecting exchange and broker market participant data so their movements of assets can be tracked and recorded. Ostensibly used to prevent fraud, money laundering, and theft. (See also AML)
Lagging indicators are a form of technical analysis tools designed to provide information about a price movement that has already begun. Lagging indicators are generally more reliable than leading indicators.
Layer 2 refers to a secondary framework or protocol that is built on top of an existing blockchain system. The main goal of these protocols is to solve the transaction speed and scaling difficulties that are being faced by the major cryptocurrency networks.
Leading indicators are a form of technical analysis tool designed to provide information that precedes, or comes before, a price movement. Generally less reliable than lagging indicators.
1) Ledger describes the database style utilized by BTC and many other blockchains. 2) Ledger is a company that makes cryptocurrency hardware wallets.
Leverage involves borrowing (assets or currency against a margin balance) a certain amount of the money needed to invest in something such as a leveraged trade. The assets or currency is borrowed against the accounts margin balance. The leveraged assets are not owned by the firm or individual borrowing it.
Leverage is the use of debt (borrowed capital) in order to undertake a trade. The result is to multiply the potential return from that position. At the same time, leverage will also multiply the potential downside risk in case the trade does not pan out.
A leveraged exchange is an exchange or broker that allows margin trading against the market.
Liabilities are financial obligations and/or debt. Liabilities are the negative column to the positive column of assets in your portfolio.
The Lightning Network is a layer 2 payment protocol designed on top of the Bitcoin blockchain. It allows instantaneous transactions and settlement off-chain with only the final state of participating nodes being recorded onto the layer 1 Bitcoin blockchain.
A limit order is a type of order set to purchase or sell an asset at a specified price or better. For buy limit orders, the order will be executed only at the limit price or lower. In the case of a sell limit orders, the order will be executed only at the limit price or higher. This stipulation allows traders to better control the prices they trade at. Limit orders rest in the order books until such time as they are cancelled or market transacted against.
Liquidation is the price at which a leveraged position will cease to have any available margin, causing the position to close and the exchange/broker to confiscate the remaining balance on the position or account (brokers may place a Margin Call at this time).
Liquidity is a market’s feature whereby an individual or firm can quickly purchase or sell an asset without causing a drastic change in the asset’s price. Liquidity is about how big the trade-off is between the speed of the sale and the price it can be sold for. Low liquidity/Illiquid markets lead to price slippage for large orders.
Liquid markets are markets with large amounts of trading activity, volume, and/or market participants. The more liquid a market, the more it is able to absorb large amounts of buying and selling without large market movements.
Long is a trading position in which the trader is expecting the asset or currency price will appreciate and therefore realize a profit by selling at a higher price than it was purchased at.
A long hedge is a trading position in which you countertrade your own short position in the same or correlated asset/currency in order to reduce risk.
A lot is a fixed quantity of units of an asset that are purchasable all at once. Sizes vary from asset to asset and market to market.
An initialism for “Long Term Hold”. An LTH is a position which an investor plans to hold for at least one year.
An initialism standing for “Low Volume Node”. The opposite of a “High Volume Node”, these are areas of the volume profile with low amounts of volume representing inefficiencies in the market. Breakouts or breakdowns in price often occur from these areas.
An acronym for “Moving Average Convergence Divergence”. The MACD is a widely used trend following indicator showing the relationship between two moving averages. Commonly calculated by subtracting the 26 period EMA from the 12 period EMA.
Maintenance margin is the minimum amount of equity that must be maintained in a margin account. In traditional U.S. markets, the NYSE and FINRA require investors to keep at least 25% of the total value of their securities in a margin account.
Maker fees are rebates assessed on certain exchanges (Bybit, Bitmex, Deribit etc.) for limit orders. Maker fees are given because these orders “make”, or provide, liquidity for the order books.
Margin is the collateral that the holder of a financial instrument has to deposit with a counterparty (exchange or brokerage) to cover some or all of the credit risk the holder poses for the counterparty.
A margin call is a broker’s demand of an investor who is using margin to deposit additional money so that the margin account is brought up to the maintenance margin requirement.
An abbreviation for “Market Capitalization”, is the market value of a publicly traded company’s outstanding shares. Market capitalization is equal to the share price multiplied by the number of shares outstanding
Market cycles are the periods of growth and decline in a market, sector or industry. This is a general term referring to trends or patterns that emerge during different markets or business environments. Market cycles are commonly defined as the period between the two latest highs or lows of a common benchmark in the market.
Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares, or coins in the case of cryptocurrency.
A market order is a request made by an investor or trader through a broker or on an exchange to buy or sell an asset immediately at the best available current price.
A master node is defined as a governing hub in some cryptocurrency networks. It requires an initial collateral of tokens (or a “stake”) to operate. A node is defined as any computing device (computer, phone, etc.) that is maintaining a network. A master node has a managing role and special jobs that regular nodes don’t have.
Maturity or maturity date refers to the final payment date of a loan or other financial instrument, at which point the principal is due to be paid. The term fixed maturity is applicable to any form of financial instrument under which the loan is due to be repaid on a fixed date.
(See Total Supply)
Mining is the act of validating blockchain transactions. Miners contribute processing power to a blockchain network to help determine the next block. The necessity of validation warrants an incentive for the miners, usually in the form of coins.
Momentum trading is a technique in which traders buy and sell according to the strength of recent price trends. Price momentum is similar to momentum in physics, where mass multiplied by velocity determines the likelihood that an object will continue on its path.
Moon/Mooning refers to a cryptocurrency’s extreme upward price momentum as it keeps climbing in price. Example: “The price of this coin will one day go to the moon!”
Moving Averages (MA’s) are widely used indicators in technical analysis that help smooth out price action by filtering out the “noise” from random short-term price fluctuations. They are trend-following, or lagging, indicators because their calculations are based on past prices. Common examples of different types of moving averages are the Simple Moving Average (SMA), Exponential Moving Average (EMA) and Smoothed Moving Average (SMMA).
Multi-signature (multisig) addresses allow multiple parties to require more than one key to authorize a transaction. The needed number of signatures is agreed at the creation of the address. Multi signature addresses have a much greater resistance to theft.
1) Net position is the amount of currency bought or sold that hasn’t been offset by opposite transactions.
2) Net position is the value of the position subtracting the initial cost of setting up the position. For example, if 100 options were purchased for $1 each and the option is currently trading for $9, the value of the net position is $900-$100 = $800.
A node is any computer or other device connected to a network.
Nonce is an abbreviation for”Number Only Used Once”. Nonce is a number added to a hashed—or encrypted—block in a blockchain that, when rehashed, meets the difficulty level restrictions. When the solution is found, the blockchain miners are offered cryptocurrency in exchange.
Noob (internet slang, often pejorative). A noob or newbie; refers to the idea that someone is new to a game, concept, or idea; implying a lack of experience. Also, in some areas, the word noob can mean someone is obsessed with things.
An offer or asking price/ask is the lowest price a seller of an asset is willing to accept for a unit or lot of said asset. For over-the-counter stocks, the asking price is the best quoted price at which a market maker is willing to sell a stock. On cryptocurrency exchanges the ask is the lowest price a seller is willing to sell a given quantity of coins or tokens.
An open order is an order to buy or sell an asset that is to be executed when an, as yet, unmet requirement has been met before it is cancelled by the customer or it expires. The customer has the flexibility to place an order to buy or sell a commodity or security that remains in effect until their specified condition has been met. Open orders are, in effect, limit orders that have not been filled yet.
Open source refers to a computer program with source code that can be modified or enhanced by anyone. Open source grants users of an application permission to fix broken links, enhance the design, or improve the original code. Open source practices often lead to considerable savings in time and expense for both making improvements to existing protocols and creating new ones.
An option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified price (called the strike price) prior to or on a specified date, depending on the form of the option.
An order is an investor’s or trader’s instruction to a broker, brokerage firm or exchange to purchase or sell an asset on the investor/trader’s behalf. These order instructions will affect the investor’s profit or loss on the transaction and, in some cases, determine whether the order is executed at all.
The order book is the list of orders (manual or electronic) that a trading venue (in particular stock/cryptocurrency exchanges) uses to record the interest of buyers and sellers in a particular financial instrument. A matching engine uses the book to determine which orders can be fully or partially executed.
An oscillator is a technical analysis indicator that varies over time within a band or line (above and below a center line, or between set extreme levels). Oscillators are used to discover short-term overbought or oversold conditions. Common oscillators are MACD, ROC, RSI, CCI.
An initialism for “Over The Counter”. A term used to describe off-exchange trading executed directly between two parties, without the supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges. An exchange has the benefit of facilitating liquidity, providing transparency, and maintaining the current market price.
Overbought refers to a tradeable asset that analysts or traders believe is trading above its intrinsic value. Overbought generally describes recent or short-term upwards movement in the price of the asset, and reflects an expectation that the market will correct the price (to the downside) in the near future.
Overnight position is a term which is used in relation to trades left open until the following trading day on international financial, currency, and commodity futures markets.
A paper wallet is a printed document containing the information linked to your wallet, i.e. your private key, public key, etc.
Parabolic is an expression of a market situation in which the velocity (of the object of interest, commonly price) increases exponentially over time in a manner which, on a chart, visually resembles a parabola. A parabolic movement of an asset results in a”runaway”condition. Trading parabolic moves correctly can be highly profitable.
Parity refers to the condition where two (or more) things are equal to each other. It can thus refer to two assets having equal value, such as a convertible bond and the value of the stock if the bondholder chooses to convert into common stock.
A partial fill is a trade execution where some, but not all, of a specific order is filled at the desired price.
Permissionless is a term often used when describing blockchain technologies because anyone can download the digital record, known as the blockchain, and participate in recording and verifying information.
A pipette equals 1/10 (one tenth) of a pip.
An acronym for “percentage in point” or “price interest point”. A pip is a unit of change in the exchange rate of a currency pair. Currency pairs are often quoted to four decimal places, but the tick size in a given market may be, for example, 5 pips or 1/2 pip.
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies, and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded, and closed funds. A portfolio can also consist of non-publicly tradable securities, like real estate, art, and private investments.
A position in trading and investing is the amount of a security, commodity or currency which is owned by an individual, dealer, institution, or other fiscal entity. They come in two types: “short positions”, where an asset is borrowed, immediately sold and then bought back, and “long positions”, where an asset is bought and then sold.
Premining is the mining or creation of a certain quantity of a cryptocurrency before it is made publicly available. Often used as a funding mechanism or as a way for the development team of a project to maintain administrative control of the network until such time as it can be sufficiently decentralized.
Premium has multiple meanings in finance. One being the total cost to purchase an options contract. Another meaning for a premium is the difference between the price paid for a fixed income security and the security’s face value amount at issue. It’s most common definition in the world of trading and investing is going to be the additional cost one pays to secure a particular security, currency, or commodity relative to its market value or spot value (when speaking of futures or derivatives).
Presale, in cryptocurrency, is a token sale available to a limited number investors before the project’s official ICO. In traditional finance, presale is an order to purchase part of a new municipal bond issue that is accepted by an underwriting syndicate before an official public offering.
Price discovery is the process of setting the spot price, but most commonly the proper price, for a security, commodity or currency.
Private keys are a string of data that allows you to access the coins/tokens in a specific wallet. They act as passwords that are kept hidden from anyone but the owner of the address. Private keys unlock your digital asset wallet and everything inside it for whatever transaction you (or whoever has it) chooses. It is not advisable to share these keys with ANYONE.
Profit is traditionally defined as the financial benefit realized when the amount of revenue generated from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity. In trading and investing, profit is the difference between the value of a position at entry and the value of the position when exited if the trade or investment has been successful after accounting for fees.
Proof of Stake (PoS, *read Proof of Work first)
Proof of Stake is a system to manage consensus on a blockchain. Unlike Proof of Work, Proof of Stake Blockchains require individuals who want the right to add the next block to the blockchain to ‘stake’ or ‘put up’ their cryptocurrency. They then become a Validator, and an algorithm selects the Validator for the next block based in part on the size of one’s stake. Block Rewards distributed for maintaining the network are thus proportional to the “stake” that the validators have in that economy. As opposed to a PoW (Proof of Work) system in which miners are rewarded the “work” they do, in PoS, one’s stake increases based on the amount of currency in the staking wallet and how long it’s been there. The greater your stake, the higher the odds are that you will be selected by the algorithm to validate the next block, and thus receive the block reward. In contrast to PoW where scarcity comes from processing power, in PoS, the scarcity comes from the currency itself. As of July 2017, Ethereum is using a Proof of Work system but will be transitioning to a PoS system at some point, currently projected to occur by the end of 2020.
Proof of Work (PoW)
Proof of Work is the system by which most cryptocurrencies, including Bitcoin, manage their blockchains. Through a process known as mining, individuals contribute processing power to solve difficult, arbitrary calculations to earn the right to mine the next ‘block’ in the blockchain. Using Bitcoin as an example, this block contains a list of transactions that have recently been conducted using Bitcoin that are stored, until immortalized in the Blockchain Ledger by a miner, in a temporary pool known as the mempool. Whenever a new block is added to the chain, the miner credited for creating that block is rewarded with Bitcoin. The amount of currency rewarded depends on when the block was mined, as every 210,000 Blocks the mining reward/block reward for Bitcoin is halved. The Bitcoin that constitutes this Block Reward is newly minted Bitcoin that is brought into existence through the process of mining. The total supply of Bitcoin is 21,000,000 and Bitcoins can only be mined until that max supply has been reached. Once all potential Bitcoins have been mined miners will compete to receive transaction fees. The difficulty of the calculations required to solve the Block Puzzle automatically adjusts to account for the computational power vying to solve the block, or amount of competition. The reason for these difficult calculations is to secure the network by making it difficult for an attacker to start adding invalid blocks to the universally accepted chain – in this system, the attacker would need to generate over 50% of the processing power (See 51% attack) in the entire network to have their malicious validation be accepted. A higher-level way to think about this is that processing power is what creates scarcity and is proportional to the odds of being rewarded for new block creation. This has the unfortunate side-effect of giving a disproportionate amount of power, in regards to both reward and blockchain validation, to miners that control a large portion of the mining hashrate.
A protocol is basically a foundational layer of code that tells something how to function. It’s the program that forms the software basis of any given network. Think of a protocol as a set of rules that allow entities to communicate and transmit information. Protocols are not specific to cryptocurrency.
A Public Key is a wallet address. This key is shared in order to have cryptocurrency sent to this address or requested be sent to this address. They act essentially as email addresses that can be published anywhere, unlike private keys which should be kept secure by the owner/owners of the wallet.
A pullback is a pause or moderate drop in an asset’s price from recent peaks that occur within a continuing uptrend. The term pullback is usually applied to pricing drops that are relatively short in duration – for example, a few consecutive sessions – before the uptrend resumes.
A pump is a dramatic increase in the price of an asset. “Ethereum was pumping today.”
Pump and Dump
Pump and dump (P&D) is a form of market manipulation, usually performed on small market cap stocks or cryptocurrencies. This occurs when the organizers artificially inflate an asset’s price (using various techniques) and then exit their positions, causing a price collapse.
A put option is a type of options contract giving the owner (buyer) the right, but not the obligation, to sell, or sell short, a specified amount of an underlying security at a predetermined price within a specified time frame. The predetermined price the put option buyer can sell at is called the strike price. The date at which the put option expires is called the expiration date. If the option is not executed before the expiration date it will expire worthless.
Quantitative easing is a monetary policy in which a central bank purchases specified quantities of financial assets to increase the money supply and encourage lending and investment.
A quote is a price determined at a specific instance of time for an asset traded on the market.
A rally is a period of sustained increases in the price of a specific asset, asset class or an entire market. Rallies can occur during both a Bull or Bear market.
Range refers to the difference between an asset’s low and high price for a particular trading period.
Realized Profit and Loss
Realized profit and loss is the final disposition of a trade when completed; these are profits and losses that are actually booked.
Reducing risk is the process of averaging out of a potentially unprofitable trade.
REKT is a crypto slang term literally meaning “wrecked”. People are “REKT” when their leveraged position is liquidated or any position, leveraged or otherwise, is closed netting a large loss.
Resistance is an area of a specific asset or market that price has difficulty rising above. Resistance levels can be psychological or technical in nature. Areas of price that have acted as resistance, once overcome, can act as future support and vice versa.
A retail trader is an individual who trades their own personal account only.
Risk is exposure to financial loss.
Risk management is the technique of utilizing position sizing and portfolio management to mitigate your exposure to losses.
Risk parity is an approach to investment portfolio management which focuses on allocation of risk, usually defined as volatility, rather than allocation of capital.
Risk to Reward
Risk to reward is the ratio between amount of loss a trade can net to the profits it can realize.
An initialism for “Return on Investment”. ROI is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost.
Rollover rate is the interest earned or paid from holding a Forex position overnight.
And initialism for “Relative Strength Index”. The RSI is a commonly used oscillating indicator used to measure price momentum.
Safe Haven Asset
A safe haven asset is an asset that is uncorrelated or negatively correlated to the markets, such that purchase of the asset will protect you from a market downturn by virtue of its non/negative correlation.
An acronym for “Secure Asset Fund for Users”. SAFU is an emergency insurance fund used by cryptocurrency exchanges. On the 3rd of July, 2018, Binance announced the Secure Asset Fund for Users “To protect the future interests of all users, Binance will create a Secure Asset Fund for Users (SAFU)”. SAFU is now a poularized crypto slang term meaning funds are “SAFE”.
One Satoshi is the smallest unit of bitcoin possible. There are 100 million satoshis in a single bitcoin. (See also Satoshi Nakamoto)
Satoshi Nakamoto is the mysterious creator of Bitcoin and author of the Bitcoin whitepaper. Known to possess over a million bitcoins, his/her/their/its identity is still unknown to the public.
A scalp is a type of short term intraday trade, often executed in a matter of minutes or seconds. Scalp trading is often used during periods of high volatility.
Scrypt (pronounced “ess crypt”) is the PoW encryption algorithm for Litecoin and Dogecoin; this algorithm requires less resources than Bitcoin’s SHA-256 encryption algorithm.
A seed phrase or mnemonic seed is a collection of words that can be used to access a cryptocurrency wallet. The seed phrase represents a wallet’s private keys. This key was then encrypted and transformed into a readable format creating the seed phrase. It is very important to keep seed phrases safe, as anyone who has access to a wallet’s seed phrase is able to access the funds in that wallet.
An abbreviation for “Segregated Witness”. SegWit is an implemented Bitcoin soft fork designed to reduce data usage and enable new scaling features such as Lightning Network by changing the way data is organized on Bitcoin’s blockchain.
A sell wall is an order block composed of a large enough amount of limit order asks such that price is unable to continue appreciating.
An abbreviation for “Secure Hashing Algorithm 256”. SHA-256 is an encryption hashing algorithm used by Bitcoin and other PoW cryptocurrencies encryption.
Sharpe Ratio is used to help investors understand the return of an investment compared to its risk. The ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. The Sharpe Ratio is calculated by subtracting the risk-free rate from the return of the portfolio and dividing that result by the standard deviation of the portfolio’s excess return.
Shitcoin is a negative colloquialism used to denote the true value of a cryptocurrency. Initially used in reference to any coin that is not Bitcoin, the term has evolved over time to mean a cryptocurrency that the speaker ultimately believes to be worthless.
Short covering is synonymous with closing a short position. This is accomplished by buying the asset back to “cover” the amount of asset you originally borrowed when opening your short position.
Short positions are taken by borrowing an asset (from a broker or exchange) to sell on the open market. Short positions (also called “shorting”) are taken by traders when they expect price to depreciate. This is a method of trading used to profit when assets decrease in value.
A short squeeze is a market event in which a large amount of short interest has accumulated on an asset but price continues to appreciate. Shorts are forced to cover or be liquidated, which causes price to appreciate even more, causing more shorts to be forced to cover, etc. This domino effect tends to cause large positive price movements as shorts flee the market.
Slippage is price movement caused by a large market order. Slippage can be an issue for retail traders on assets with a low market cap and/or on exchanges with low liquidity. For larger markets, slippage is usually only encountered by large institutional investors and is sought to be avoided.
An initialism for “Simple Moving Average”. (See Moving Averages)
Smart contracts encode business rules in a programmable language onto a blockchain and are enforced by the participants of the network.
A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version.
A speculator is a type of trader that seeks to make money off of movements in price only and does not take into account company growth over the long term. Speculators are asset-agnostic.
Spot long is the purchasing asset on the open market, synonymous with ownership of an asset.
Spot price is the last traded price for an asset for immediate purchase or delivery. This is opposed to asset prices on futures or other financial product derivatives.
Spread is the price difference between the Ask and the Bid in a marketplace. The larger the spread, the more the entry price of market orders is eroded from the real last traded price. (See also Ask or Asking Price and ||Bid|
Staking is the process of holding coins/tokens in a specific type of wallet (stake-able wallet), sometimes for a minimum period of time, to earn more of that asset. Staking functions similarly to earning interest on cash deposits in a bank account. In a Proof of Stake system, this generally means leaving coins in a wallet to increase their stake in an attempt to net rewards from block creation.
Stochastic is an indicator for technical analysis of the markets. It is a momentum indicator comparing a particular closing price of an asset to a range of its prices over a certain period of time, relative to the high and low of price during that period.
Stop loss is a type of order that closes out all or part of your position at a specified price level to prevent further loss of profits or balance on your position.
Stop Loss Hunt
A stop loss hunt is a market movement orchestrated by institution level investors/whales to bring price to a level that will set off retail trader stop losses, thereby creating liquidity for the larger investors.
A trading strategy is the method of buying and selling in markets that is based on predefined rules used to make trading decisions.
Support is an area of the market that price has difficulty falling below. This could be psychological or technical in nature. Areas of price that have acted as support, once broken, can act as resistance in the future.
A swap is a type of derivative contract in which one party exchanges (or swaps) the values or cash flows of one asset for another. Swaps tend to be customized contracts that are traded between institutions, with individuals rarely if ever owning or participating in swaps.
Swing Trading is a speculative style of trading for the daily timeframe and above that seeks to profit from the up and down “swings” of the market from day to day and week to week, rather than from a long term growth perspective or intraday.
Systems trading is following an algorithmic set of rules for reacting to market conditions such that, when conditions are met and rules followed, has been shown to be statistically profitable over time. (See also Algorithmic Trading)
Take Profit (TP)
Take profit is a partial or full trade exit point to realize profit in a trade.
Taker is the market order side of a transaction. They are taking the price that is asked by the limit buyer or seller.
A taker fee is assessed on some cryptocurrency exchanges (ByBit, Bitmex, and Deribit etc.), for market orders that “take” liquidity from the order books.
Target is a price, or price range, one expects an asset to reach during appreciation or depreciation.
Acronyms standing for “Transmission Control Protocol”/”Internet Protocol”. TCP/IP is the connection protocol used by the internet.
Technical Analysis (TA)
Technical analysis is financial market analysis that uses patterns in market data to identify trends and make predictions. It is the use of past price information to identify trends, areas of supply & demand, and profitable trade setups.
The flippening is the idea that at some point Ethereum’s (or another cryptocurrencies) market capitalization, and overall blockchain dominance, will overtake Bitcoin’s.
The Halvening is the date, time, and block at which Bitcoin’s miner subsidy/block reward is halved. This usually causes a supply shock in the market and is a main driver of market impulse movements. (See also Halving)
A Tick is the smallest increment in which prices are quoted in a marketplace. (i.e. .001, .00001, .0000001, etc.)
Time to Maturity
Time to maturity is the amount of time before the maturity date for a bond, usually set at bond’s creation.
A token is a form of digital asset native to blockchains and other DLTs.
Total supply is the maximum final coin or token allocation for a blockchain’s ecosystem.
Trade size is the number of contracts/USD value/position size of a given trade.
Trading range is a price range inside of which price bounces around during periods of consolidation.
A trailing stop is a type of stop loss that stays a set distance from price and moves with price in the direction of your trade. If price moves against your trade, the trailing stop stays in place, until such time as it is crossed by price, effectively closing out the trade.
Transaction cost is the fee associated with making a trade when participating in a market.
Transaction fees are incurred on all cryptocurrency transactions broadcasted to the network. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.
A trend is the directional bias component to price movement.
A trendline is a visual representation of the extremes of prevailing price movements, drawn onto a price chart. Levels of support and resistance can also be plotted out as a trendline to establish potential entry and exit points for a trade.
Trustless is the description of a system in which no faith in an intermediary third party is required.
Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of.
An underlying asset is the asset that a derivative contract’s value is based on.
Unrealized profit or loss is the theoretical result of a trade if it were to be closed at current price and exists only on paper until the trade is closed.
Uptick is the upward price movement from one transaction to the next.
The uptick rule is a financial regulation in traditional markets requiring short trades to be opened at a higher price than the preceding trade (i.e. on an uptick).
The value date is a future date used in determining the value of a product that fluctuates in price.
VIX is the ticker symbol for the CBOE Volatility Index. It is a popular measure of the stock market’s expectation of volatility implied by S&P 500 index options.
Volatility refers to how often the price of an asset is changing. The opposite of volatile is stable.
Volume is a measure of the aggregated total of transactions for an asset and/or currency pair during a time period or at a given price.
An initialism for “Volume Profile Visual Range”. The VPVR is a method of charting volume by price, rather than volume by time.
A wallet file that houses private and public keys. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.
Wash trading is the process of buying and selling to oneself (typically done by exchanges) in order to artificially inflate trading volume and the give the appearance of increased market participants.
Weak hands is a derogatory term used to describe individuals induced to panic sell their shares or assets before price appreciation.
A wedge is a type of trading pattern in which price consolidates between two converging trend lines which are directionally oriented, i.e. rising wedge or falling wedge.
Whales are traders with massive amounts of the currency being traded. They are able to sell and buy in quantities large enough to manipulate the market price in the short term.
Whipsaw is a volatile price movement that could kick people out of their trades.
Whitelists in the blockchain and cryptocurrency environment are either related to withdrawal addresses or Initial Coin Offering (ICO) events. In regards to cryptocurrency withdrawal addresses, whitelist refers to a list of addresses that a user defines as trustworthy. In that case, they would only be able to withdraw funds from their exchange account to the addresses that were previously whitelisted. Whitelisting is an efficient way for users to protect their funds from hackers. In the case of ICO’s, cryptocurrency projects may offer a whitelisting phase for investors that are willing to participate in the public sale of their tokens. Investors that want to participate in the ICO would need to provide their personal information before being whitelisted (this is usually done through a KYC procedure).
A whitepaper as it relates to cryptocurrency is a document which includes an outline of a problem that the project is looking to solve, sets forth a solution to that problem, and incorporates a detailed description of their product, its architecture and its interaction with users.
The win/loss ratio is the ratio of the total number of winning trades to the total number of losing trades. It does not take into account how much was won or lost, but simply if they were winners or losers. The win/loss ratio is used mostly by day traders to assess their daily wins and losses from trading. It is used with the win-rate, that is, the number of trades won out of total trades, to determine the probability of a trader’s success. A win/loss ratio above 1.0 or a win-rate above 50% is usually favorable. The win/loss ratio is also used by systems traders developing a new strategy to determine whether or not that system will be profitable over a long period of time. This is accomplished through rigorous backtesting of a given system.
X is the symbol used to define the multiplier used in leverage trading, i.e. 2x, 10x, 100x. For example, using 2X leverage on a trade would give the trader twice the initial margin put up for that trade. 10x would give the trader 10 times the initial margin and so on. The higher the “x” factor, the higher the risk and higher the reward for that trade.
Yield is a return measure for an investment over a set period of time, expressed as a percentage.
Zero-knowledge proof is a method by which one party (the prover) can prove to another party (the verifier) that they know a value x, without conveying any information apart from the fact that they know the value x.