Trading Glossary

If a stock has a Bid of $100.00 and an Ask of $100.05, the 5-cent difference is the Spread. This is the cost of market execution.

High volatility assets move rapidly; they offer big profit potential but carry significantly higher risk.

Major crypto pairs are highly liquid; rare assets are illiquid and hard to exit.

A sustained period of growth where the overall trend is upward.

A period defined by pessimism and widespread selling pressure.

A healthy cooling-off period in an otherwise rising market.

Exchanges act as the marketplace providing the liquidity and infrastructure for orders.

Deep books have many orders at each level, meaning price is less likely to move significantly on a small trade.

Use a Market Order when speed is your priority and you want to get in immediately. Use a Limit Order when you want to control the exact price at which you buy or sell.

Common during high volatility or low liquidity moments.

"My limit order just got filled" means the market hit your price and your trade is active.

Fast, accurate execution is the hallmark of a professional trader.

You are the aggressor when you click "Buy Market."

You are a liquidity provider when you place a limit order.

Used by whales to trade large volumes without moving the market price.

Used by institutional traders to minimize their market impact when moving large positions.

Traders use VWAP to gauge if they are getting a "fair" price compared to the market average.

"Going long" is the standard way to profit from growth.

You sell an asset you don't own (by borrowing it) to buy it back later at a lower price.

If you buy at $50, you might set a stop-loss at $45 to exit automatically if the trade goes against you.

You exit at $60 to lock in your gains before the market reverses.

Don't put all your capital into one coin; balance your risk across several.

Short-term traders focus on 1-minute charts; long-term traders look at daily or weekly timeframes.

A "ceiling" that price struggles to break above.

A "floor" that acts as a buffer against further declines.

This is your "real" balance—the amount you would have if you closed everything right now.

Analyzing the raw chart and candles to make trading decisions.

Your position shows as green or red, but the money isn't officially in your balance until you close the trade.

Unlike unrealized PnL, this is the amount that is actually added to or subtracted from your available balance.

This is the value that determines your margin health.

"Don't lose money" is the first rule of trading.

10x leverage means a 1% price move results in a 10% gain or loss for your account.

Think of it as a "good faith" deposit to control a larger value.

If you get liquidated, you only lose the margin assigned to that specific trade, not your entire account.

This prevents liquidation if you have other profitable positions, but risks your entire balance if the market moves significantly against you.

If you hold 1 BTC contract at $60,000, your notional value is $60,000, regardless of the margin used.

If your balance drops below this level, the exchange triggers automatic liquidation.

If you use 10x leverage, your initial margin is 10% of the position's total value.

A 20% drawdown means your account value dropped 20% from its highest point.

A core pillar of risk management; never risk more than 1–2% of your total equity per trade.

A 3:1 ratio means you risk $1 to potentially make $3.

Unlike traditional futures, these are the most common instruments for crypto trading, anchored to the spot price via funding rates.

If the rate is positive, longs pay shorts. If negative, shorts pay longs.

If price hits your liquidation point, the exchange takes over your position to prevent the account balance from going negative.

Exchanges use this to prevent price manipulation and unfair liquidations from "wicking" on a single exchange.

The "real" market price used to calculate the funding rate and keep the perpetual contract in line.

High open interest combined with a price move often indicates a strong trend continuation or an imminent squeeze.

This is a "safety valve" during extreme volatility to ensure the exchange remains solvent.

A positive basis means the futures price is higher than spot (Contango); a negative basis means it is lower (Backwardation).

A rapid downward move triggered by the forced exit of over-leveraged long positions.

"Shorts getting squeezed" is a common phrase when price action moves violently upward against heavily shorted positions.

You trade via these tickers to ensure you are operating on the correct pair.

Often seen in bull markets where buyers are willing to pay a premium for future delivery.

Often indicates a supply shortage or strong demand for immediate delivery.

A premium means the contract is trading above the index price; a discount means it is below.

Unlike perpetuals, dated futures require you to close or roll your position before this time.

In crypto, this is usually cash-settled, meaning profit/loss is automatically adjusted in your account balance.

You don't own the underlying coin; you own a contract that tracks its value.

You might go short on futures to protect your spot Bitcoin holdings during a market downturn.

You set a stop at $50 and a limit at $49.50; if price hits $50, an order to sell at $49.50 is placed.

Occurs every 8 hours (or as set by the exchange) in perpetual contracts.

Combining a long spot position with a short futures position to hedge market direction.

Deceptive practice often used to inflate exchange metrics.

Buying low on Exchange A and selling high on Exchange B simultaneously.

Often caused by algorithmic trading glitches or massive "market sell" orders in low liquidity.

Observing the "tape" to understand where the institutional money is moving.

They earn money from the spread and are vital for efficient market functioning.

A trend follower buys when prices are making new highs and sells when they are making new lows, adhering to the mantra: "The trend is your friend."

A reversal trader bets that an asset has become "overextended" and anticipates a snap-back toward the historical average or a significant trend change.