The A-Z of Crypto Trading

a-z

The cryptocurrency world may be highly exciting and potentially lucrative, but it also comes with a raft of new jargon for investors to learn. There are dozens of unique terms reserved for the crypto world and new abbreviations and slang appear quite regularly. These are some of the main ones to know in our A-Z guide:

Addresses

Crypto wallets have their own unique identifying address which lists their position on the blockchain ledger. This location holds information about each coin's ownership and trade history. Usually, the address will comprise a string of at least 30 characters, depending on the underlying blockchain.

All-time highs... and lows (also ATH)

These are the highest and lowest price recorded for any cryptocurrency.

Altcoins

Bitcoin is the original and best-known cryptocurrency, but all others - such as Litecoin (LTC) are referred to as Altcoins.

Bag

This refers to a large sum of crypto units a person is holding.

Bearish

When the cryptocurrency price is anticipated to go down. Derived from the downward motion a bear makes when striking for his prey.

Bitcoin

The original cryptocurrency. It was created by Satoshi Nakamoto as a decentralised, peer-to-peer digital cash system - the first of its kind.

Bitcoin Dominance

A measure of how much of the total market cap of crypto is comprised of Bitcoin. It can help you understand the trend of BTC and alts.

Blockchain

The underpinning technology which enables cryptocurrencies to be traded and stored in a permanent, digital ledger. Each block holds a full history of each trade made for a cryptocurrency.

Bullish

When the cryptocurrency price is anticipated to go up. Derived from the upward thrust of a bull’s head in combat.

Cap

An abbreviation for Market Capitalisation (ie. the amount of currency in existence multiplied by price)

Central ledger

This describes total control of a system of financial records, such as that operated by a bank.

Cipher

In cryptography, a or is an algorithm for performing encryption or decryption—a series of well-defined steps that can be followed as a procedure.

Cross-Chain

What occurs when one cryptocurrency is transferred to another. As the transaction is recorded in two separate blocks on either blockchain, they become linked.

Confirmed

When a transaction is confirmed, it is officially approved within the network and included in a Block.

Cryptography

The process by which information is encrypted and decrypted.

Deflation

When demand for certain cryptos decreases and the price goes down. Depth chart
These plot bids to purchase and requests for sale, allowing investors to set limit orders on their transactions.

Difficulty

Within the context of cryptocurrency, difficulty refers to the cost of mining at any particular point. The difficulty self-adjusts with the number of active miners in the network to guarantee a steady timing between blocks and the release of miner’s subsidy (“Rewards”).

Digital commodity

Assets with a defined value that are digitally transferred. Digital signature
Used in lieu of a physical signature to confirm authenticity. These typically appear as public key encryption codes.

Distributed ledger

One stored across a variety of locations so that multiple parties can evaluate and confirm entries. This refers to the blockchain in crypto circles, which are checked across multiple network nodes.

Divergence

Trading concept that forms when a stock’s price diverges from a momentum oscillator which typically indicates a reversal.

Dump

When you try to sell most of, or all of your crypto holdings. If too many traders dump at the same time, the cryptocurrency's price is likely to drop.

Dust transaction

Deliberately small transactions which sometimes flood the market. Some traders do this purposely in a bid to slow the network down, some holders do this regularly to unity all their holdings of a specific crypto in one address.. The minute trades are called dust transactions.


DYOR

Good advice - it stands for 'Do Your Own Research'!


Encryption

When a cipher is used to convert readable text into coded digital text.

Escrow

When a third party holds transaction funds - usually between the sender and receiver of those funds.

Exchange

The platform on which traders buy and sell cryptocurrencies, with fiat currencies.

Faucet

Watch out for websites that claim to give you “drops” of 'free' cryptos in return for connecting with them. Known as 'faucets', they are usually scams.

Fiat

Legal government tender, such as the Euro. The term fiat derives from the Latin word fiat, meaning "let it be done" used in the sense of an order, decree or resolution. This implies that Fiat derives its value not from underlying assets or “inherent value” but by decree of the issuing government.

FOMO

Millennial text speak and something to avoid when trading - 'Fear Of Missing Out'!

FUD

Another red-hot acronym which stands for 'Fear, Uncertainty and Doubt' and which is used heavily on forums.

Fundamental analysis

An approach to ascertaining the value of a cryptocurrency, by assessing relevant financial and economic factors, as well as the market opinion and other influencers.

Futures contract

Two entities enter into a pre-approved contract that triggers a transaction when a cryptocurrency value hits a pre-defined price. This is a bound contract.

Genesis block

The first block ever mined in a particular blockchain.

Hard cap

Some cryptocurrencies or token issuances are hard coded to not issue any more than a certain amount of coins. For bitcoin, the “hard cap” is 21.000.000 BTC.

Hardware wallet

Physical devices, like a USB, which store encrypted cryptocurrency. These are considered the gold standard of safe storage.

HODL

The term “hodl” was first coined on the bitcointalk forums in 2013 and gained popular traction all over the crypto space since then.

Hodl Blog

ICO

An 'Initial Coin Offering' that is designed to raise funds - launched by the creator of a new crypto and similar in some ways to an IPO - 'Initial Public Offering'.

JOMO

The 'Joy of Missing Out' - when you remembered to HODL and avoided selling low!

KYC

'Know Your Customer' - referring to the obligation on banks to verify customer identity in line with data protection laws

Lambo

Someone getting rich quickly from a great run of crypto trading luck. Refers to the car they might buy!

Layer 2

Networks that promise transactions that are recorded “offchain”. For Bitcoin, the most prominent L2 Network is the “Lightning Network”.

Ledger

A financial transaction record, which cannot be changed - only added to. Leverage
A type of trading loan, offered by brokers.

Leverage

A type of trading loan, offered by brokers, enabling you to trade more crypto than you currently have, but with the increased risk of total loss if the price moves against the desired direction.

Limit orders

Where traders set rules to buy or sell their cryptocurrency of choice at a certain price.

Liquidity

How easily crypto can be bought or sold without affecting the market price overall.

Long

When you are planning to stockpile a large value of cryptocurrency in the hope that it will grow in value - to take a long position.

Market Cap

Market Capitalisation is a measurement used to classify an asset’s total value, which can be categorised between small, medium or large cap, and is based on the number of the total assets outstanding multiplied by the current last price.

Market Makers

Market Makers create the spread. They are large institutional banks that are both buyers and sellers of a stock. They will post a Bid, and Post and Ask. They create the spread, and the profit by selling shares between the spread. The larger the spreads, the more the market makers can profit.

Market Trend

The market trend represents the general direction in a market or security over a given period of time, which can last from a couple of minutes days to many months or years.

Off Chain

A method to transact in a crypto currency that does not use the blockchain.

OTC Market

The Over-the-counter market allows for the trading of assets without the formal structure of official exchange.

Price Target

A price target is the projected price of a financial instrument as provided by an analyst and is used determining under and overvalued stocks.

Profit/Loss Ratio

A profit/loss ratio is a measure of the ability of a particular trading system to generate profit instead of loss and is based on a percentage basis.

Resistance Level

A resistance level is the price level at which selling of a security is deemed strong enough to eliminate the increase in price.

Short

When you sell an asset, or even “naked” short it by borrowing and then selling it, you are betting for the price of the asset to decline to buy back at a later time.

Spread

The spread is the difference between the bid price and the ask price.

Support Level

A support level is the price level whereby the demand of security is strong enough that it prevents the decline in price past it.

Volatility

Volatility is a measure of the security’s stability and is usually calculated as the standard deviation derived over a given period of time.

Volume

The total amount of coins traded in the last 24 hours.

There's certainly a lot to learn in the world of cryptocurrency trading, but the more you can get to grips with the jargon, the more you will learn about how the markets work. This is the key to becoming a confident and successful investor and trader - building a healthy long position if investment for growth is your game, or a regular income if profitable trading is your goal.

Now you're equipped with the basics, you can make your first trade.

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