Terms You Might Want To Learn
A
Absolute Advantage
An economic concept wherein one party possesses a distinct efficiency advantage in the production or provision of a particular good or service compared to another party.
Active Management
An investment approach utilized by fund managers with the goal of surpassing the performance of an index or the overall market to achieve profitable outcomes.
Address
A sequence of text that indicates the position of a specific wallet within the blockchain, frequently represented as a hashed form of a public key.
Algorithm
A series of clear rules employed to address and resolve a specific issue, particularly in trading
All-Time High (ATH)
The highest price of a market instrument, such as a dollar, or cryptocurrency
Anti Money Laundering (AML)
A structure comprising legal and regulatory measures designed to reduce and control the movement of funds derived from illicit or questionable activities.
Arbitrage
Purchasing and selling assets across various markets to capitalize on varying price fluctuations for the same asset.
Artificial Intelligence (AI)
Artificial Intelligence (AI) refers to the intelligence exhibited by machines or computer systems, mimicking cognitive processes similar to those of humans.
Ask Price
The minimum price at which a seller is prepared to execute their sell order when trading an asset.
Asset Management
A system or approach that aids individuals or businesses in overseeing assets, whether on behalf of clients or for their own management.
Assets Under Management (AUM)
AUM (Assets Under Management) represents the market value of financial assets overseen by an entity for clients, serving as an indicator of influence and operational scale.
Automated Market Maker (AMM)
Automated Market Makers (AMMs) constitute a category within decentralized exchange (DEX) protocols, enabling users to trade digital assets without requiring an intermediary.
B
Bear Market
A downward trend in market prices, commonly observed in all market sectors but also in cryptocurrencies.
Benchmark
A benchmark that serves as a standard for evaluating the performance of a specific asset or investment portfolio.
Beta (Coefficient)
A tool utilized to assess the volatility of an asset relative to the volatility of a specific portfolio or market index.
Bid Price
Within the financial markets, it represents the amount buyers are willing to pay for an asset, be it a commodity, index, equities, foreign exchange, or cryptocurrency.
Bid-Ask Spread
The price disparity between the lowest asking price and the highest bid price listed on the order book for a particular asset.
Bitcoin
A digital currency conceived by the pseudonymous developer(s) Satoshi Nakamoto, recognized as the inaugural cryptocurrency and originally outlined as a ‘Peer-to-Peer e-cash.’
Block
A computer file designed to store transaction data, which can subsequently be organized in a linear sequence, contributing to the formation of a blockchain.
Block Explorer
An online blockchain platform that enables users to explore details concerning blocks, transactions, balances, and transaction histories.
Block Header
A segment within a block that encompasses metadata and a synopsis of the block’s transactions.
Blockchain
A distributed and digital ledger that chronologically records transaction details for a cryptocurrency in a decentralized manner.
Bollinger Bands
A technical analysis indicator designed to gauge market volatility, consisting of two parallel bands and a simple moving average.
Breakout
When the price of an asset deviates from a specified range or pattern, often by surpassing a support or resistance level.
Bull Market
A bullish trend in market prices, commonly noted not only in traditional markets but also in cryptocurrencies.
C
Candlestick
A graphical representation of price movements, illustrating the opening, closing, highest, and lowest points within a specific timeframe.
Capitulation
A phase characterized by intense selling activity, during which investors liquidate their positions and swiftly sell their holdings.
Central Bank
A financial institution responsible for serving as a monetary authority and overseeing a state’s currency, interest rates, and money supply.
Centralized Exchange
Traditional cryptocurrency platforms that are recognized for their ample liquidity, advanced trading tools, and attention to risk factors.
Coin
A cryptocurrency or digital currency that operates independently of any other platform, serving as a medium of exchange.
Collateral
Offering a valuable asset as collateral for a loan to ensure the borrower’s commitment to complete repayment.
Colocation
A specialized area within a data center owned by stock exchanges, shared with other entities like high-frequency traders.
Compound Interest
Compound interest involves the accumulation of interest on the initial amount, along with the interest earned from preceding periods, enabling the optimization of earnings on the principal sum.
Confirmation Time
The time span from submitting a transaction to the network to its inclusion in a confirmed block.
Confluence
The amalgamation of various investment methods, technical indicators, or trading signals to create a more dependable strategy.
Consumer Price Index (CPI)
A Consumer Price Index (CPI) is a metric used to monitor the impact of inflation over a specific period.
Copy Trading
Copy trading is the practice of duplicating the successful trades carried out by seasoned traders.
Counterparty Risk
Counterparty risk is the potential danger that one participant in a financial transaction might default or be unable to fulfill its contractual commitments, leading to financial losses for the other party.
Credentials
Personal information encompasses details such as a username, password, email address, qualifications, and various other identifying data.
Crypto Protocol
A cryptocurrency protocol is a collection of rules and procedures that dictate behavior within a decentralized network.
Cryptocurrency
A digital currency secured by cryptography, designed to function as a medium of exchange within a peer-to-peer (P2P) economic system.
Cryptography
The discipline that employs mathematical theories and computational methods to encode and decode information is known as cryptography.
Custody
Pertains to the custody of assets on behalf of a client and can also denote the ownership of one’s funds or assets.
D
Daemon
A process functioning in the background, ready to be activated upon the occurrence of a specific event or condition.
Decentralized Autonomous Organization (DAO)
A framework of rigidly programmed rules that dictate the actions a decentralized organization will execute.
Decentralized Exchange (DEX)
A trading platform that doesn’t necessitate users to deposit funds initially and doesn’t retain custody of the funds. Instead, users engage in trades directly from their own wallets.
Decentralized Finance (DeFi)
The ecosystem composed of decentralized financial applications built on top of blockchain networks.
Decentralized Indexes
A decentralized index is a form of investment instrument that mirrors the performance of various cryptocurrencies or digital assets traded on decentralized exchanges.
Decryption
The process of reversing an encryption method to convert unreadable data (ciphertext) back into readable data (plaintext) is known as decryption.
Deep Web
The section of the web that is concealed or not indexed by traditional search engines such as Google is often referred to as the “deep web” or “dark web.”
Divergence
When the market price of an asset is moving in the opposite direction compared to a technical indicator (e.g., RSI, Volume, MACD), it is referred to as divergence.
E
Efficient Market Hypothesis (EMH)
The efficient market hypothesis is an economic theory positing that financial markets incorporate all available information, reflecting the current prices of assets at any given time.
Encryption
The process of transforming information or data into a secure code to prevent unauthorized access is known as encryption.
Exchange
A cryptocurrency exchange is a platform where users can buy and sell various cryptocurrencies.
F
Fakeout
A situation where a trader opens a position anticipating a price movement that swiftly reverses or ultimately does not materialize is commonly referred to as a “fake out.”
Falling Knife
The act of buying an asset while it is rapidly declining in price, with the anticipation that it will rebound, is known as “catching a falling knife.”
Fear Of Missing Out (FOMO)
The apprehension and anxiety about potentially missing out on a lucrative opportunity are often referred to as “FOMO,” which stands for Fear of Missing Out.
Fear, Uncertainty and Doubt (FUD)
A marketing strategy that aims to instill fear and insecurity among customers, traders, or investors.
Fiat
Fiat currency refers to money that a government has declared to be legal tender.
Fiscal Policy
Fiscal policy refers to how authorities adjust tax rates in a country, influencing the collection and allocation of public funds.
Forced Liquidation
The forced closure of a trader’s leveraged position due to insufficiently meeting the required margin is commonly known as a “margin call.”
Forex (FX)
Forex, short for Foreign Exchange Markets, is a global marketplace for the trading of fiat currencies.
Fraud Proof
A fraud proof is cryptographic evidence that a verifier submits to contest the validity of a transaction. These proofs are commonly employed for enhancing blockchain scalability.
Full Node
A computer that comprehensively enforces all the rules of an underlying blockchain network, thoroughly validating transactions and blocks on the blockchain, is commonly referred to as a “full node.”
Fundamental Analysis (FA)
Analyzing an asset by considering its fundamental characteristics and features in an attempt to determine its intrinsic value is referred to as fundamental analysis.
Fungibility
The characteristic of an asset where individual units are identical and interchangeable in terms of value and functionality is referred to as fungibility.
Futures Contract
Futures contracts are standardized versions of forward contracts, serving as legal agreements to buy or sell an asset in the future at a predetermined price and date.
G
Gas
The pricing mechanism used on the Ethereum blockchain to calculate the costs of smart contract operations and transaction fees is known as “gas.”
Gas Limit
The highest fee that a cryptocurrency user is willing to pay when sending a transaction or executing a smart contract function is referred to as the “gas limit.”
Golden Cross
A bullish chart pattern known as a “golden cross” occurs when a shorter-term moving average crosses above a longer-term moving average.
H
High-Frequency Trading (HFT)
High-frequency trading (HFT) is a type of algorithmic trading that involves the rapid execution of a large number of orders in fractions of a second.
I
Index
A financial instrument utilized to mirror the price value of a specific asset or a basket of assets is known as an “index fund” or “exchange-traded fund (ETF).”
Initial Public Offering (IPO)
The term for the moment when a private company begins offering its shares to the public for the first time is called an “initial public offering (IPO).”
Interest Rates
Interest rates can pertain to either the cost of borrowing money or the return earned on an investment, typically expressed as a percentage of the principal amount.
Interoperability
Interoperability is the concept of enabling blockchains to be compatible with each other, allowing them to build upon each other’s features and use-cases.
Isolated Margin
The margin balance allocated to a position is the amount of funds set aside by traders to manage risk by limiting the exposure assigned to each position.
Issuance
The creation of a new cryptocurrency, known as “coin generation” or “coin creation,” occurs in various ways depending on parameters specified by the creators.
K
Know Your Customer (KYC)
A standard procedure in the finance industry known as “Know Your Customer” (KYC) enables companies to identify their customers and adhere to Anti-Money Laundering (AML) laws.
L
Latency
The time elapsed between submitting a transaction to a network and receiving the first confirmation of its acceptance by the network is known as the “confirmation time.”
Law of Demand
The law of demand pertains to the propensity of consumers to purchase a specific quantity of goods or services at different price levels.
Layer 2
A secondary framework or protocol built on top of an existing blockchain system, designed to enhance scalability, is commonly referred to as a “layer 2 solution.”
Ledger
A ledger, whether physical or digital, is a book or computer file used to track and record monetary and financial transactions.
Liquidity
The capability to purchase or sell a specific asset without causing significant fluctuations in its market price is known as “market liquidity.”
Liquidity Provider
Liquidity Providers (LPs) are entities or individuals that contribute buy and sell orders to the financial markets, aiming to enhance market liquidity and maintain a stable and efficient market environment.
M
Mainnet
A blockchain protocol that is fully developed and deployed involves transactions being broadcasted, verified, and recorded in a decentralized manner.
Margin Trading
Trading using borrowed funds is known as “margin trading.” It’s essential to note that this is a high-risk strategy and should only be undertaken by experienced investors due to the potential for amplified losses.
Market Capitalization
The total trading value of a given market instrument is calculated by multiplying the supply of shares or coins by the current market price.
Market Momentum
The ability of a certain market to sustain a consistent upward or downward movement in price within a specific timeframe.
Market Order
A market order involves buying or selling a market instrument at the current best available price. While it usually guarantees execution, it does not assure a predetermined price.
Matching Engine
A matching engine is a software component crafted to execute trading orders, ensuring accurate payments between buyers and sellers in financial markets.
Metaverse
The metaverse is a concept that envisions a persistent, online, 3D virtual environment, widely regarded as a crucial element in shaping future digital experiences.
Monetary Policy
Monetary policy refers to the set of policies created and adopted by authorities to regulate the money supply and interest rates in a country.
N
Node
A participant on a blockchain network that communicates with other participants to ensure the security and integrity of the system is commonly referred to as a “node.”
Non-fungible Token (NFT)
A non-fungible token (NFT) is a type of cryptographic token that represents a unique digital or real-world asset and is not interchangeable with other tokens.
O
OCO Order
An OCO (One Cancels the Other) order enables the placement of two orders simultaneously, combining a limit order with a stop-limit order. However, only one of them can be executed, and if one order is filled, the other is automatically canceled.
Order Book
An order book is an electronic list that displays the outstanding buy and sell orders for a specific asset on an exchange or marketplace. It provides real-time information about the current demand and supply levels in the market.
P
Pegged Currency
A currency designed to maintain a fixed value in relation to a designated asset, such as 1 USDT being pegged to 1 USD, is commonly known as a “pegged currency” or “stablecoin.”
Price Action
Price action refers to the movements of a financial asset over time. When plotted on a chart, it provides visual representations of an asset’s historical price movements, and traders use it to identify potential trade setups and patterns.
Private Key
A private key is an alphanumeric code that functions similar to a password. It is a fundamental component enabling the management and control of cryptocurrency assets.
Pump-and-dump
Pump-and-dump is a deceptive practice observed in the cryptocurrency market, involving the artificial inflation of a digital asset’s price followed by a rapid sell-off, leading to a significant decline in the token’s value.
Q
Quantum Computing
Quantum computing operates with particles in superposition, representing qubits instead of classical bits. Qubits have the unique ability to exist in a state of 1, 0, or both simultaneously, enhancing the processing power and capabilities of quantum computers.
R
Relative Strength Index (RSI)
A technical indicator that gauges market momentum and is utilized to identify overbought and oversold conditions is the Relative Strength Index (RSI).
Resistance
In Technical Analysis (TA), the term used to describe a situation where an increasing price encounters resistance, often compared with previous highs, is referred to as a “price rejection” or “rejection from resistance.” This indicates a level at which the market has historically struggled to move beyond.
Return on Investment (ROI)
The measure used to assess the efficiency of an investment, calculated as the ratio between net profit and net cost.
S
Satoshi
The smallest unit of a bitcoin, as defined by the Bitcoin protocol, is called a “satoshi.” One satoshi is equivalent to one-hundred-millionth of a bitcoin or 0.00000001 BTC.
Sell Wall
A very large limit sell order or an accumulation of sell orders at the same price level on an order book for an asset is commonly referred to as a “sell wall.”
Sentiment
The overall sentiment of a community regarding a market instrument or among investors toward a specific financial market is commonly referred to as “market sentiment.” It reflects the prevailing attitude, opinions, and emotions influencing trading and investment decisions within that community.
Sharpe Ratio
The Sharpe Ratio, created in 1966 by William F. Sharpe, is a ratio that investors and economists use to assess the potential return of an investment (ROI) adjusted for its risk. It measures the excess return per unit of risk in an investment or a trading strategy.
Social Trading
Social trading is a strategy that allows individuals to replicate the trading actions of expert investors and market professionals, often in real time. This approach leverages social platforms and networks to facilitate the sharing of trading insights and strategies among participants.
Stablecoin
A stablecoin is a type of cryptocurrency specifically designed to maintain a stable value, often pegged to a fiat currency like the US Dollar or another stable asset.
Support
In Technical Analysis (TA), the term used to describe a situation where a decreasing price finds a level of “support,” often compared with previous lows, is referred to as a “price bounce” or “support bounce.” This suggests a level at which the market has historically shown resilience and potential buying interest.
T
Ticker
The trading symbol or shortened name, typically in capital letters, that refers to a market instrument on a trading platform is known as the “ticker symbol.” For instance, “US100” is the ticker symbol name for NASDAQ.
Transaction ID (TXID)
A Transaction ID (TXID) is a unique string of characters that serves as an identifier for each transaction on the blockchain.
U
User Interface (UI)
The interface where interactions between humans and machines occur is referred to as the “user interface” (UI). It establishes how a user can interact with a machine or a software application, encompassing elements such as graphical displays, buttons, and other interactive components.
V
Volatility
The measure of how quickly and by how much the price of an asset changes is known as “volatility.” Volatility is often calculated in terms of standard deviations in the annual return of an asset over a specified period of time. Higher volatility indicates greater price fluctuations, while lower volatility suggests more stable price movements.
Volume
The measurement of the number of individual units of an asset that changed hands in a market during a given time is referred to as “trading volume.” Trading volume provides insights into the level of market activity and liquidity for a particular asset. Higher trading volumes often indicate increased market interest and participation.
W
Wallet
A cryptocurrency wallet is a tool used to send and receive cryptocurrencies. Various types of wallets exist, including software wallets (stored on devices like computers or mobile phones), hardware wallets (physical devices designed for secure storage), and paper wallets (printed or written copies of public and private keys). Each type has its own advantages and considerations in terms of security and accessibility.
Whale
An individual or organization that holds a substantial amount of cryptocurrency or capital possessing the potential to influence the markets, is commonly referred to as a “whale.” Whales, due to their significant holdings, have the capacity to impact prices and market dynamics through their trading activities.
Wick
The line on a candlestick chart used to indicate where the price of an asset is fluctuating in relation to its opening and closing prices is called the “wick”. The wick extends from the top and bottom of the candle’s body, representing the range between the highest and lowest prices during a specific time period.
Win Rate
In financial markets, the win rate, also known as the win ratio, is a metric that indicates the percentage of profitable trades a trader achieves relative to the total number of trades. It is a measure of trading success and profitability, helping traders assess the effectiveness of their strategies. A higher win rate suggests a greater percentage of winning trades, while a lower win rate indicates a larger proportion of losing trades.
Y
Yield
In trading, “yield” refers to the total return or profit generated from an investment, expressed as a percentage or a monetary value. It encompasses various sources of income, including dividends, interest, and capital gains, providing a measure of the overall effectiveness and profitability of a trading strategy or portfolio.
Z
ZigZag Correction
In technical analysis, a zigzag correction is a pattern characterized by a series of three waves labeled A, B, and C. It represents a corrective move against the prevailing trend.
