The first thing you’ll notice when you decide to dip your toe into cryptocurrency trading is just how many different – and often confusing – words get thrown around. Some originate from traditional trading, some have have appeared in the wake of the crypto boom.
With that in mind, we’ve prepared a primer on the most commonly used terms and how they relate to crypto trading.
Bullish / Bull Market
When described as bullish, the price is expected to increase. An easy way to remember is “bull’s lift up with their horns, bears pull down with their claws”.
Bearish / Bear Market
When described as bearish, the price is expected to decrease. An easy way to remember is “bull’s lift up with their horns, bears pull down with their claws”.
Margin is the amount required to open a position. ‘Free margin’ is the total amount you have available to open new positions, whereas ‘used margin’ indicates the amount in use to keep a position open.
Leverage allows you to use the funds in your account to open a position greater than your total account margin. For example, a leverage of 10:1 would allow you to use a $1,000 margin to open a $10,000 position.
Spread refers to the difference between the Ask price and the Bid price.
Also known as “going long”. Long positions are when you buy a security, in anticipation of the price increasing. So if the price goes up, you make a profit.
Also known as “going short”. Conversely, short positions are when you first sell the security, then later buy it back. If the price goes down, you make a profit.
Limit Order (limit buy / limit sell)
Traders can place a limit order to buy (limit buy) or sell (limit sell) a particular coin when it hits a certain price. Ex: if you place a Buy Limit order at $300 and the ask price is $300 then your order will be filled.
Market Order (market buy / market sell)
A market order is used when you really want a fill. Placing buy order will buy the security at the lowest Ask price. Conversely, a sell order will sell the security at the highest Bid price.
The total value of a particular cryptocurrency. Market cap is calculated by multiplying the price of a coin by its total supply.
Total supply refers to the amount of coins that exist for a particular cryptocurrency. This is most often decided at the time of a coin’s creation.
Fiat refers to a currency issued by a government, such a British Pounds (GBP) or US Dollars (USD).
Meaning ‘return on investment’, ROI indicates the amount of money that was made compared with the amount spent. For example, 100% ROI means making double what was initially invested.
Essentially any cryptocurrency that isn’t Bitcoin (or Ethereum, depending on who you ask).
A coin that isn’t subject to large volatility, usually because it’s backed by certain assets or guarantees that help large price fluctuations.
A whale is someone who owns a very large amount of an individual cryptocurrency.
“Fear, uncertainty and doubt”. This refers to information or rumours with no grounding, often intended to decrease the value of a cryptocurrency.
“Fear of missing out”. When people begin buying a cryptocurrency after seeing its price sharply increase.
Meaning ‘all time high’, this indicates when a token hits the highest price it’s ever been.