The following Glossary is intended for people who are new to the world of cryptocurrencies and trading, therefore the language used is not intended to be of an academic level but rather of an easy reading to understand.
It is a virtual currency, that is to say that it does not exist physically like a banknote or a metal coin, and in general decentralized, that is to say that it is not issued by any specific entity (such as the central banks of the countries), but is created automatically by algorithms of many computers distributed in the world (not all cryptocurrencies are decentralized, some do belong to a company that controls it).
Fiat currency is called everyday common money, issued by countries, dollar, euro, etc.
They are cryptocurrencies that maintain their constant price with respect to a reference. For example, a stablecoin against the dollar will always be worth 1 dollar (examples: USDT, DAI, USDC).
It is a cryptocurrency, it was the first and is currently the most popular and most used. Bitcoin is like a decentralized bank, that is, it allows you to open an account (called a wallet) that can deposit bitcoins there and maintain a balance, and send those bitcoins to another account (another wallet), but unlike a bank, nobody It handles Bitcoin, it does not belong to anyone, it works thanks to a network of connected computers that collaborate for its correct performance (you can also connect your computer for this, it is free and public), there are no Bitcoin offices as if there were a bank, and therefore also if you make a mistake when making a shipment or lose your account (number or password) there is no one to complain to, but there is also no way for anyone to block your account (as if they could block a bank account), each one he owns his own economy in the world of cryptocurrencies.
This is the name given to all the cryptocurrencies that exist in addition to Bitcoin, as Bitcoin was the first and is the largest, the rest of the cryptocurrencies, such as Ethereum*, Cardano*, etc. are usually grouped together under the name of altcoins. * Actually the cryptocurrencies of Ethereum and Cardano are called "Ether" and "ADA" respectively, but in common jargon they are used as synonyms.
They are altcoins that have no real value, basically scams (SCAM)
They are computer programs that allow you to save cryptocurrencies (remember that they are virtual, they do not exist physically). The wallets have a unique address that identifies it, which is usually a very long number (actually alphanumeric), this address is used to receive cryptocurrencies, similar to a bank account number. With the wallets we can also send the cryptocurrencies to other addresses (other wallets).
Keep cryptocurrencies (wallets) disconnected from the internet. This is important if we are not going to move cryptocurrencies frequently, to keep them more secure, as long as we are connected to the internet we run the risk of being hacked and the wallet password stolen. Remember that the balance of our wallet is not in any specific place, it is not that it is on our computer or mobile, etc. The balance is maintained by the thousands of computers that participate in the network, so even if our computer breaks, if we have we can recreate the password of our wallet again and the balance we had will still be there (so a simple way of cold storage is to simply save the password/private keys on a piece of paper)
It is the technology base of all cryptocurrencies. Understanding how the blockchain works is a bit technical and would be too extensive for this glossary, but basically it is what guarantees that transactions are carried out reliably even if there is no centralized entity that controls and regulates it (that is, even if it is decentralized). In financial terms, the blockchain is where the record of all the transactions that are made with the cryptocurrency is kept, this is public for the whole world, that is, everyone can see each of the movements that are made (transfers), even so, it continues being anonymous because only the addresses of the wallets can be seen, not who it belongs to.
It is the minimum unit in which a Bitcoin can be divided, the same as a cent is a division of the dollar, a satoshi is equivalent to 0.00000001 BTC, that is, 100 million satoshis are 1 BTC. Also Satoshi Nakamoto is the creator of Bitcoin, but no one knows his true identity, or if he really exists.
A mechanism that allows parties to securely transmit information to each other through insecure channels. It's basically a technique that uses mathematical algorithms to hide information, making it unreadable for someone intercepting that information. Cryptocurrencies use cryptography to provide security to the system, so that no one can alter it.
Cryptocurrencies to work use cryptography to ensure that only the owner of each wallet can access those funds and transfer them to another wallet. For this, a very common mechanism is used in cryptography that is double key, a public key and a private key. When you create a wallet, both will be created, the public one can be shared (it is your address, like your account number) and the private one you must keep secret because it is like your password, which is used to be able to send from your wallet.
MINERS / MINING
It is the process by which transactions are validated and cryptocurrencies are generated. There are different ways to achieve this, such as proof of work, proof of stake, etc. But it basically consists of making some resource available to the network, such as computing speed, or the cryptocurrencies themselves to make the network secure. Those who make these resources available are called miners (anyone can be) and they receive for Therefore, a reward for doing so (they receive the profit from the commissions that are paid in each transaction and they also receive the new cryptocurrencies that are generated).
It is a computer program, which runs within the blockchain (the cryptocurrency to put it simply). Due to the characteristics of the cryptocurrency system (security, immutability, etc.) there are things that today require a legal contract, with lawyers, notaries, etc. that could be done directly with an intelligent contract that controls and executes everything. For example, if two people decide to bet on whether a soccer team will win the game, they can do so by word of mouth, or they can give more security with a legal contract signed before a notary, etc. A smart contract would allow both of them to deposit the money wagered on it, and when the match ends, the smart contract program checks on some news site who won and gives the money to the corresponding one, without any human intervention and without anyone being able to. prevent that from happening. Smart contracts open the door to countless applications that could speed up, guarantee and lower the cost of many operations that today require lawyers and complex contracts.
A token is very similar to a cryptocurrency (for practical purposes for trading the difference is not that important), but it differs in that a token does not have its own blockchain, but uses the blockchain of some cryptocurrency as a base, therefore tokens cannot be mined either.
HASH RATE / HASH POWER
The cryptocurrencies that use the proof of work for their mining process need computers that perform very complex mathematical calculations, the sum of all this computational power is called hash power.
A hard fork is an update of the cryptocurrency code that includes changes that are too large and therefore forces all programs that use the blockchain of that cryptocurrency to be updated. Sometimes it happens that there is a part of the users (rather the miners) who do not agree with the new change and prefer not to update, in these cases in which they do not all agree, the blockchain can be divided into two parts , and then two cryptocurrencies are created, and it is the market (the people) who will end up choosing which of the two they prefer to use (or perhaps both, as has happened for example with Bitcoin where Bitcoin Cash was created and both cryptocurrencies are used ).
Initial Coin Offering. It is similar to an IPO in the stock market (shares). That is to say, just as a company when it goes public and begins to trade on the stock market offers its shares at an initial price, the cryptocurrencies (or tokens) When a new cryptocurrency (or a new token) is created, the creators can sell the initial cryptocurrencies that they own for having created them at an initial price that they consider, and people buy them directly from them, in this way they manage to finance their project, and those who believe in the project manage to buy cryptocurrencies at a very cheap price. The danger of buying into an ICO is that the project is just starting up, so it is a high-risk investment if the project later fails.
The halving is basically reducing the reward that the miners have, that is, reducing the new cryptocurrencies that are generated, when this happens (or if it happens) it is defined by the code of each cryptocurrency. The objective is to limit the issuance of cryptocurrencies over time because in general many cryptocurrencies, unlike fiat money, have a maximum limit of coins, this means that there can be no inflation. An analogy is often made between cryptocurrencies such as Bitcoin and Gold, both owe their value, among other things, to the fact that they are scarce, and that it is increasingly difficult to obtain.
It is a marketing activity used by new projects where they give away some of their cryptocurrencies/tokens, with the aim of getting people interested in them, using them, promoting them in the media, etc.
A White Paper is a document that includes a summary of the problem that the project (the cryptocurrency/token) is trying to solve, the solution to that problem, as well as a detailed description of its product, its architecture, and its interaction with users.
Whenever we refer to a decentralized system, we will be talking about a system based on blockchain technology, which allows its operation without there being a single point where all the calculations are made, etc., but rather there are many computers distributed throughout the world. In general, decentralized systems are also public, there is no company that owns the system and the network.
It refers to the fact that the code in which the cryptocurrencies are programmed is publicly accessible, everyone can see it and even make contributions to it.
Decentralized Application, usually the applications (this also includes websites) have their processors and databases hosted on a central server, the hosting, which can also be a cloud such as Amazon Cloud etc. In a decentralized application, the most critical part of the application, such as the data it stores, is not on hosting but on a blockchain. In general, dapps are also open source since the objective is to prioritize transparency, control and trust in the data and processes that are executed (in applications like Facebook or Twitter we never know exactly what they store, nor how they use it, nor do we own those data even if we generate it, they can decide to delete or censor what they want).
It is the market capitalization, the value obtained by multiplying the number of circulating cryptocurrencies by the price of each coin. For example, if there are 1 million Bitcoins in total already issued and each bitcoin is worth $10, then your market cap is $10 Million. It gives us an idea of the total value of the cryptocurrency.
Peer To Peer (From user to user, peer to peer). Strictly P2P refers to a type of communication between computers where all participate as a server and as a client, that is, they can download information from another computer (acting as a client) or they can send it to another that requests it (acting as a server), it is a way of collaboration between many computers so as not to depend on a central server that processes and stores everything (as normally happens, for example, in servers such as Google or Facebook). In trading we also call P2P transactions that are made between two people without intermediaries, that is, when you make a P2P purchase/sale you get in direct contact with another person, they agree on the payment method, the amount to pay/receive etc in private (sometimes there are websites that act as a guarantee, allowing you to see the reputation of the other person, or start a dispute if the other person did not comply with their part)
Buying and selling (usually on an exchange) on a relatively frequent and regular basis in order to make a profit on that purchase/sale. To do this, you basically have to buy low and sell high (or sell high and buy back cheaper later), and to achieve this you have to have a good analysis that tells you where to buy and where to sell.
It is a type of trading in which purchase / sale operations are made in minutes or maximum hours. In other words, when we close the positions we open in a short time, it is said that we are scalping. In general, therefore, they are operations with little price variation, and for this very reason, it is necessary to take care of the percentage that is paid in commissions.
It is a type of trading in which operations usually last days or weeks, that is, when we are aiming at an analysis or search for medium-term results, it is said that we are doing swing trading.
HIGH FREQUENCY TRADING (HF, HFT)
It is a type of trading executed by computers at a speed that no human could achieve. These algorithms and computers in general belong to large firms with a lot of money because they are very expensive to develop and maintain.
They are computer programs used to automatically trade on an exchange (or several). These programs execute buy and sell orders without human interaction, following the strategy they have in their code.
In this type of trading, the aim is to obtain a profit through the difference in prices that exist in different exchanges/markets for the same asset. For example, if the price is $1,000 on one exchange and $1,010 on the other, then we could buy on the first exchange and sell on the second most expensive. These operations must be carried out very quickly because the price difference is not usually maintained, which is why they are usually done by bots. Although there are markets where bots cannot be used and price differences can be taken advantage of.
They are all the operations that we have in progress, without closing yet.
In strict terms, it refers to each purchase/sale operation that is carried out (remember that every purchase operation implies a sale, if someone buys $100 it is because someone else is selling that $100. In popular jargon we will use the term as a synonym for entry to the market, or position in the market, that is, if we enter a long position (buy), we will say that we are in a long trade, and when we exit (in this example, being in a long position would be selling), we will say that we close the trade.
It is the profit or loss that we have in the open positions (the trades that we have not yet closed).
Trading equity refers to the absolute value of a trader's account taking into account the net asset value of current open positions (ie floating profit or loss). The equity then is basically: Money deposited + Profits - Losses + Floating Profits (not yet closed) - Floating Losses.
It is the result (profit or loss) that we already obtained, it is usually measured day by day, that is, the NLP usually shows the difference with the previous day.
Return On Equity. It measures the percentage gain we have with respect to our equity. In other words, if our equity is $1,000, for example, and we have an open position with a floating profit of $100, then we will have a 10% ROE.
To be long, in long, or to enter long means: to buy. In other words, we have a bullish vision, we think that the price is going to rise and therefore it is convenient for us to buy. To open a long you have to buy, and to close an already open long you have to sell.
Going short, short, or going short means: selling. That is to say that if our analysis indicates that the price is going to fall, we can open a short operation, to obtain a profit if the price falls. These operations can only be done in futures markets or that allow margin (leverage), not in spot markets. To open a short we have to sell, and to close an already open short we have to buy.
BEAR (Bearish market)
Those who have a bearish vision/feeling of the market are called bears, that is, they believe that the price will fall.
BULL (Bullish market)
Bulls are those who have a bullish vision/feeling of the market, that is, they believe that the price will rise.
Holding is simply holding the cryptocurrencies we buy, not selling them. Holders are those who believe that the cryptocurrency they bought is going to be worth much more in the future, which is why they prefer to keep it and not trade.
It is the same as hold, it emerged as a meme due to a typographical error by someone who posted in a forum in 2013 “I AM HODLING” and then it remained forever in the world of cryptocurrencies.
Companies that offer asset purchase and sale services (stocks, bonds, cryptocurrencies, etc.). They allow you to create an account, where you can deposit (and then withdraw when you want) the capital to invest (depending on the exchange, it will allow you to deposit in some cryptocurrency and/or in fiat). The difference between a broker and an exchange is that the broker does not have an order book, rather it acts as an intermediary defining the available buy and sell prices. In general, in cryptocurrencies we will operate with exchanges.
It is a Decentralized Exchange, this means that it allows you to do the same buying and selling operations as an exchange but that nobody owns that exchange, it does not belong to any company, but rather it is self-controlled and regulated by cryptocurrency algorithms.
Know Your Customer. Es básicamente el pedido de información personal (documento de identidad, verificación de dirección física, etc) que realizan los exchanges para validar la identidad del usuario. En general los exchanges están obligados a pedir esta información por requerimientos legales y de políticas anti-lavado de dinero etc.
It comes from the acronym Decentralized Finance. The main idea is to be able to offer services similar to those currently offered by financial entities (such as banks), but in a decentralized way, without any company controlling and imposing its restrictions and rules. In this way, thanks to algorithms that work in different cryptocurrency networks, we can request a loan, for example, and no one will ask us for papers or we will have to ask for authorization, etc., it is all automatic. In the same way we can deposit money and earn interest on that deposit, as if it were a fixed term, etc.
This is the name given to the cryptocurrency market in general, for example the BTC/USD pair (Bitcoin against the dollar), or also BTC/ETH (Bitcoin against Ethereum).
This is the name given to the stock market, publicly traded companies, for example Apple, Amazon, Tesla etc. are stocks.
This is the name given to the foreign exchange market, that is to say the exchange between different currencies, for example the Euro/Dollar pair.
It is the purchase and sale of assets without leverage, the real asset is bought, not a derivative of it.
DERIVATIVES / FUTURES
It is a financial product whose value is based on the price of another asset. Basically a derivative is a contract that will define some conditions, rights and obligations as in any contract and then allows you to speculate on what the price will do in the future, etc. It is a very extensive subject because there are many derivatives and they are used for different things, but what most matters to us who will be trading is that when we operate with futures contracts (futures are one type of derivative, options are another). ), as for example in BitMEX, we are not buying the real asset (in this case the real cryptocurrency) but we are buying contracts, instead when operating in spot if we are really buying the asset. What is the advantage of trading derivatives then? that allow us, for example, to use leverage (see below), or go short, we must also take into account that they can charge commissions for maintaining the contract for a long time.
ETFs are buyable assets that follow the price of some other asset, or many, and are backed by the actual asset (meaning the institution holding the ETF buys the actual asset, this is a major difference from derivatives). For example, there could be an ETF for technology companies, which contains shares of Apple, Amazon, Google, etc., so buying that ETF is similar to buying shares of that set of companies. In Bitcoin, an ETF would be important because it would allow some advantages compared to buying Bitcoin directly, for example it could be easier to buy, nowadays you have to open an account in a crypto exchange, or create a wallet and keep your bitcoins safe somewhere. etc, keeping track of the taxes that must be paid for that is also complicated. An ETF makes many things easier for large investors.
The SEC is a government agency of the United States that is in charge of controlling and regulating the entire market for stocks, derivatives, ETFs, etc. It is like a kind of market police, it controls, for example, that there are no price manipulations, that there is no there is abuse of privileged information, etc. In the world of cryptocurrencies there is no one to control these things at the moment, which is why the movements and market traps that exist there are more wild and frequent.
Leverage is basically asking the broker/exchange for a loan to operate with more money than we have. Usually it is measured in "X" so for example if our account has $1000 and we use a leverage of 3X we will have $3000 available to trade. But it must be remembered that the exchange will never let us lose more than the actual $1000 we have. Using high leverage is very risky and could make us lose everything in seconds.
It is the purchase and sale of assets with leverage, and which also allows shorting.
It is an instruction that we give to the Broker/Exchange to buy or sell, some are instant execution, others are queued waiting for the set price to be reached (you can find more about the types of orders in this Glossary).
ORDER BOOK (OB)
Order book. It is the record of all Limit orders (both sell and buy) that have not yet been executed (are active) at all price levels. It is divided into two sections: Compra - Buy - BID and its counterpart: Sale - Sell - ASK. In the order book you can see how much supply (sell orders) and how much demand there is (buy orders).
OTC (Over The Counter)
It is a type of operation that is done between the seller and the buyer directly, without going through a broker or an exchange. This implies that it will not alter the market price, since it does not consume the orderbook, the prices are fixed between the parties. Many operations, especially large volumes, are done this way.
It is a type of order that is used to buy at a price that is cheaper than the current one or to sell at a price that is higher than the current one. These orders are the ones that appear in the order book (that's why they are called "maker" orders because they make the order book).
It is a type of order that is used to buy at a higher price than the current one or to sell at a lower price than the current one. They are normally used to stop a loss at a certain price level. These orders do not appear in the orderbook, but consume it, which is why it is also said to be a taker order.
This order is used to buy or sell instantly, at the current price. These orders consume (taker) the orderbook, that is, they are matched with the limit orders that exist in the orderbook.
It is a type of order in which 2 prices are defined, the stop price and the limit price. When the price reaches the stop price (also called the trigger price), the exchange instead of executing the operation that has been selected (buy or sell) at that price, what it does is create a new order, so limit type, at the set limit price.
STOP LOSS (SL)
It is a stop type order that is placed to stop the loss of a trade. Suppose you buy 1 Bitcoin at $1000, you want it to go up to sell higher, but what happens if it goes down? You can place a sell order (stop loss) at $900, that way if it goes down to $900 it will automatically sell and stop the loss in case it goes further down later.
TAKE PROFIT (TP)
It is an order, generally of the limit type, which is placed to close the trade at a more favorable price than the current one (and therefore normally make a profit). For example if you buy at a price of $100, you could place a TP (sell) order at $110. That way we would earn 10% if it is fulfilled. But if we go short at $100, then our TP would be a buy order, and it would have to be lower to take a profit, say at $90.
When an open position (wrongly called an open trade but that term is also used) is neither in loss nor in profit, it is said to be breakeven, that is, the price of the asset is right at the opening price.
RISK REWARD RATIO
It is the relationship between risk (loss) and reward (gain). Basically the relationship between our Stop Loss and our Take Profit in each trade, for example if in our TP leaves us a profit of 6% and SL leaves us a loss of 2% then our ratio will be 1:3.
BID / ASK
BID is the highest price the buyer is willing to pay, and ask is the lowest price the seller is willing to sell. That is to say that if we want to buy at the market we will have to pay the ask price (the first available seller), and if we want to sell at the market they will pay us the bid price (the first available buyer).
It is the price difference between the BID and ASK prices.
Liquidity is the ease with which an asset can be bought or sold in the market without affecting its price. In assets (or exchanges) that do not have a high demand and supply, that is, there is little volume in your orderbook, the price probably moves a lot with each buy-sell operation, and it is then said that you have little liquidity.
It is the price difference between the price at which an order is placed and its actual execution price. This happens only for taker orders (market and stop), not for limit ones, and it is common especially in markets with little liquidity, or when the order is very large because it consumes the offer (in case we are buying) or the demand (in case we are selling) of the orderbook so our final price is more unfavorable. It can also occur due to delays in the execution of our order, if there were orders from others on the exchange before ours, they will be executed first, they could consume the orderbook and by the time it is our turn to execute the price has already moved to a more unfavorable value.
It is a difference between the closing price of the candle and the opening price of the next candle. This usually occurs in markets that have opening and closing hours, for example, the stock market operates for about 8 hours a day, and it does not operate on weekends, but during that time it is closed. In the market there are usually operations (after hours and pre-market) that move the price, so at the start of the next day it is normal to see a gap. This does not usually happen in the crypto market because it is 24/7, it never closes.
It is the commission that the exchanges charge to make each purchase and sale operation, sometimes it is a fixed amount and more commonly in crypto it is a percentage of the total amount operated, which may seem low but if many operations are made it ends up adding up a lot. Some exchanges (for example BitMEX) sometimes pay us if the type of order we execute is a Limit, this can be seen because the fee listed is negative.
When operating with derivatives/futures, an extra position maintenance fee is usually paid, that is, every certain number of hours the exchange will charge us a commission. This commission is usually variable so it is important to look at its value, and we do not always have to pay it but sometimes they may pay us, depending on whether those who must pay are those who have a position in Long or Short (sometimes they pay the Long sometimes the Short, this will always be informed in advance by the exchange).
LIQUIDATION / REKT
It is the forced closing of a position that the exchange does when we have already lost more than what we had available. This occurs when trading derivatives/futures and especially when using leverage. For example, if we open a position in Long at 10X, the exchange will not let the price go against us by more than 10% (actually less because they will charge a commission and they will also have to have some security guarantee, etc.), if that happens then the exchange will force close the position, and this process is known as liquidation. If we had also put all our capital in that trade then we will end up with the account at 0.
Collateral is the capital we have available on the exchange to protect a leveraged position. This makes more sense in a special type of automatic leverage (in BitMEX this is called cross), where the exchange lends us what we need (up to a certain maximum). In this situation, if we want to reduce the current leverage, what we will have to do is deposit more money (have more collateral). By reducing the leverage we also move the liquidation price away.
We call small traders retailers, ordinary people who operate with little capital.
OPERATORS / WHALES / STRONG HANDS
The whales or large operators are usually institutions that operate with a lot of capital and usually have the power to move the price.
MARKET MAKER / LIQUIDITY PROVIDERS
Market makers are institutions with a lot of money that provide liquidity to the market, that is, their function is to continuously place Limit orders in the orderbook on both the buy and sell sides. This is something that exchanges need to make trading on their platform more attractive and fluid, so they usually hire liquidity providers to do this, and in return they share part of the profit from the commissions. Market makers generally make their profits then from these commissions and also from the spread (the difference between the bid and ask) since they are continually buying and selling. In decentralized exchanges (DEX) liquidity providers can be anyone because liquidity works differently there, without an orderbook, controlled by smart contracts.
It consists of analyzing the aspects of the asset that you want to buy/sell to know if it is going to go up or down in price. For example, in the case of a company's shares, analyze its balance sheets, what product it sells, what market that product has, who are the leaders of the company, etc. In the case of similar cryptocurrencies, who are their creators, what is the cryptocurrency for, what phase is the project in, what is its potential, what is its competition, etc.
It consists of analyzing only the price data, reviewing historically how the price moved, making calculations based on that, regardless of what asset it is, what company it is, etc., just how the price and volume moved, in search of some repeating pattern.
It is a type of technical analysis that seeks to predict the price using geometric figures, for example drawing triangles, lines etc, or candlestick patterns on the chart, for example 2 green candles and then a "hammer" candle etc. At TradingDifferent we believe that this analysis does not make any sense and is the one used by newbies who ultimately end up losing.
It is a way of summarizing the price movement you had in a certain period of time. It consists of 4 values: Open, High, Low, Close (OHLC). For example, in a 1-hour candle (we can select the time of the candles) belonging to 5pm, the Open price will be the price that the asset had at 5pm, the Close price the price it had at 6pm (1 hour later since the candle if it is 1 hour summarizes the movement of the price during that hour), the Low and High price will represent the lowest and highest price respectively that it reached during that hour (but we do not know when exactly in that hour). In this way we can compress the price information, otherwise we would need 4 points to show how the price moved during that hour. The Open and Close form the body of the candle (in a wider way), and the high and low form the wicks (also called tails or shadows) of the candle (the lines that come out of the body). The candlesticks can also be of two colors, depending on whether the Open value is less than or greater than the Close value. In other words, if the price at the end of the candle (6pm in the example) is higher than at the beginning of the candle (5pm in the example) then that candle will have the color of a positive candle (usually green) and if the price was lower at the end of the candle it will have the color of a negative candle (usually red).
A slang term used to refer to sudden strong movements in one direction but then reverse in a very short time, thus leaving a candle with a large wick.
It is our term used to refer to the movements of rapid rise and fall of the price, normally this in the graph is seen as a candle with two large wicks. These movements usually occur to liquidate both the longs and the shorts.
Movements where the price reaches a certain value or zone, bounces and moves in the opposite direction. Example: the price will have a pullback or rebound at $1,500, which means that it was going up, at $1,500 it will start to go down, and if it was going down, at $1,500 it will start to go up.
The price is lateralized when it does not move in a clear direction, it goes up and down but within a price range.
When the price moves in a clear direction for many candles, if the price goes up it will be an uptrend, otherwise it will be a downtrend.
QUANTITATIVE / ALGORITHMIC TRADING
It is a type of trading that usually operates with well-defined strategies, with strict rules, which have been backtested (analyzing their results in the past). This type of trading is the one used by bots, since they must have a very specific strategy to follow programmed.
It is a more subjective and intuitive type of trading, where the trader decides when to open or close a position without strict rules but rather relying on his experience.
They are mathematical calculations that are made on the data of the price, volume and other information to facilitate the analysis. They are widely used in technical analysis.
It is an algorithm originally created by Iván Paz and perfected by TradingDifferent that provides information on price levels where retailers are most likely to lose. Let's remember that 90% of retailers lose in trading, which is why this information is crucial for the vast majority of the strategies used in TradingDifferent.
When the price moves a lot, it goes up and down in a short time, we say that it has high volatility.
It is the process of testing a trading strategy before using it. For them, the premises of the strategy are defined and these conditions are applied to the price data from the past, with the aim of verifying what would have happened if we used that strategy in previous years.
Measures the current retracement in the results curve from the previous high. It is a way to assess the risk of the trading system, whether it is automatic or not. A high DrawDown implies that the strategy could make us lose a lot at some point, and that could be just when we start trading it with real money (the drawdown should always be calculated in a backtest first).
All Time High. It is the maximum price at which the asset reached.
TO THE MOON
In the world of crypto trading it is common to use this term to refer to the fact that the price is going to rise a lot, so much so that it will reach the Moon.
Fear of Missing Out (fear of being left out). It is a term applicable to psychology in general, but in trading we refer to FOMO when there are many people interested in buying, because they believe that the price is going to skyrocket (to the moon) and they do not want to miss that opportunity. Normally when there is too much FOMO the price actually ends up going down.
Fear, Uncertainty, and Doubt (fear, uncertainty and doubt). It is a tactic that aims to generate panic in the market, so that people sell believing that everything is going to go down, for this, false or pessimistic news is often disseminated.
An economic bubble is a situation in which there is an excessive and uncontrolled increase in the price of a good, separating from its fair value. Sooner or later the price ends up returning to the correct value of the good and at that moment the bubble is said to have burst.
Freezing refers to transferring the cryptocurrencies that are held to fiat money or to a stablecoin, in order to then preserve the value they have at that moment and not be subject to future price variations. In general, when we freeze it is because we believe that the price is going to fall.
It consists of protecting a trading position by entering the same asset (or one that moves in a correlated way) but in the opposite direction. For example, if we are in a Long position, we open a short position in parallel (probably in another exchange). It is a way of reducing the risk of a position without closing it.
In futures markets, open interest tells us what the volume of all open positions is. For each trade there is always a buyer and a seller, but a buyer may be opening a position (entering long) or closing a position (closing a short position that he had), and a seller may be opening a position ( entering short) or closing a position (closing a long that you already had). Open interest increases if both buyer and seller are entering a position (the amount by which it increases is equal to the volume of that transaction), and decreases if both buyer and seller are closing a position. If one opens and the other closes, the open interest does not change. If both the buyer and the seller are closing positions then the OI decreases.
It is a term used by programmers, basically it allows you to create programs (software) that can interact with exchanges. This is how bots manage to execute automated orders and strategies.
- ALTCOINS (ALTS)
- BEAR (Bearish market)
- BID / ASK
- BITCOIN (BTC)
- BREAKEVEN (BE)
- BULL (Bullish market)
- COLD STORAGE
- DERIVATIVES / FUTURES
- DISCRETIONARY TRADING
- DOBLE KILL
- FUNDAMENTAL ANALYSIS
- FUNDING FEE
- HARD FORK
- HASH RATE / HASH POWER
- HIGH FREQUENCY TRADING (HF, HFT)
- LIMIT ORDER
- LIQUIDATION / REKT
- LIQUIDATION POOLS
- MARGIN TRADING
- MARKET CAP
- MARKET MAKER / LIQUIDITY PROVIDERS
- MARKET ORDER
- MINERS / MINING
- OPEN INTEREST
- OPEN SOURCE
- OPERATORS / WHALES / STRONG HANDS
- ORDER BOOK (OB)
- OTC (Over The Counter)
- PRIVATE KEY
- QUANTITATIVE / ALGORITHMIC TRADING
- RISK REWARD RATIO
- SHADOW BREAK
- SMART CONTRACT
- STOP LOSS (SL)
- STOP ORDER
- STOPLIMIT ORDER
- SWING TRADING
- TAKE PROFIT (TP)
- TECHNICAL ANALYSIS
- TO THE MOON