Crypto Trading Term Glossary
This trading term glossary covers all common terms related to cryptocurrency trading. This includes the terms for long-term investors, hodlers, traders, day traders, professional investors and institutional investors.
A term is missing or is a defintion not 100% correct? Let us know in a comment on this page!
A
American Option
This type of option can be triggered at any time before its expiration date. This is in contrast to the European option type where these can only be triggered when the option expires. See the term “Option” for the definition of options in crypto trading.
At-the-Market
At-the-Market describes the possible price obtainable when an order is placed.
At-the-Money
This term describes the situation when the current strike price of an option is the same price as its underlying commodity.
B
Bear Market
A bear market describes the situation when the market dropped at least 20% from its recent highs in the past and when prices are generally trending downwards. The general sentiment of traders is characterised by a negative outlook and the general expectation of prices falling further.
Bull Market
A bull market describes the situation when the market is trending up over an extended period of time. The general sentiment of traders is positive, and prices are expected to rise steadily. New projects find funding easily and FOMO is rising.
Broker
The entity like and exchange or business that executes trade orders on behalf of a client and receives a commission.
C
CFTC
The acronym for the Commodity Futures Trading Commission (CFTC). The CFTC is an independent agency that was sanctioned by the US Congress to regulate the markets for commodity future und option trading.
CTA
The acronym for Commodity Trading Advisor. The CTA provides advice to his clients and can have the authorization to trade on behalf of the trading account owner.
D
Day Trader
A person who trades daily either professionally or for fun.
Day Trading
Day trading is either defined as trading regularly, e.g. every day or trading stocks, options and other instruments on an intra-day basis. This means buying and selling an instrument within the same trading day or vice-versa.
Discretionary Account
An account type where the account owner gives a broker or trusted person (e.g. a CTA) the authority to trade on the client’s behalf.
E
Expiration Date
The date when an option expires and the last day where it can be exercised.
Exchange
A centralized or decentralized market place on which buyers, sellers and traders can trade different types of instruments or cryptocurrencies.
F
Futures Contract
A futures contract is an option type obligating the buyer to buy or sell a certain commodity. The contract usually defines the transaction type, quality, quantity and date and is legally binding.
Fundamental Analysis
A fundamental analysis is a type of analysis looking at the fundamental data available for the analysed assets. This data can be contained in news, officially published reports, order books, historical data. Its goal is to predict the future short-term or long-term development of the analysed asset.
G
H
Hedge
A hedge is supposed to balance out or mitigate losses of trading positions.
Historical Volatility
The historical volatility is the average price change over defined periods of time.
I
Interest Rate
The fee/cost associated with borrowing or lending money.
ICE Exchange
The ICE Exchange was the first completely electronic futures exchange which revolutionized the trading landscape. The business behind ICE is also working on BAKKT.
J
K
L
Leverage
Leverage describes the action of trading with multipliers and using only a fractional deposit for trading.
M
Margin Call
The situation in which the broker requires the investor or trader to deposit more cash to cover potential losses.
Market Order
A market order is a sell or buy order at the current market rate without setting a fixed price for the order.
Market-on-Opening
An order type to buy or sell right when the market opens. This order type is not usually available for 24/7 exchanges like most cryptocurrency exchanges.
N
Naked Option
A naked option refers to the sale of a call or put that is not covered by an equivalent opposite position of the underlying asset.
O
Option Writer
The person offering/selling an option contract. This is a promise to deliver on a defined obligation in return for a certain price/premium.
P
Position Trader
A person who buys positions in future contracts for a period of time that is longer than one trading day. This type of trader is the opposite of a day trader.
Price Discovery
The situation in which a market or asset is determining its price through the actions of sellers and buyers.
Q
Quotation
The most recent price, bid or ask for an asset.
R
Rally
A rally describes rising market prices for certain assets or whole markets. A rally is not equivalent with a bull run and is shorter lived. A bull run can for example consist out of frequent rallies with short correction and sideways periods.
Range
The range describes when the price of an asset stays between its support and resistance levels.
Reaction
Another term for a correction or retracement. This usually occurs when the price of an asset moves rapidly in one direction.
Resistance
The current price ceiling for an asset where significant sell pressure is located. Usually at psychologically important levels for investors. This includes previous highs, previous long-term rest levels and price levels where a significant number of investors are able to take out profits.
S
Scalper
A type of trader who traders an even more short-term basis than day traders.
Short / Short Selling
A position betting on declining prices for the underlying asset.
Speculator
A trader trying to profit without definite evidence or analysis.
Support
The current price level where there is significant buying pressure from investors looking to get into the market. Usually located at psychologically important levels at or below previous lows.
T
Tick
The smallest possible change in price for an asset.
Trader
A person buying or selling an asset.
Trend
A consistent price movement in one direction with short lived corrections or sideways movement.
Trend Line
A line outlining the direction of a trend on average.
U
Uncovered Option
Another term for naked option.
Underlying Asset
The asset, for cryptocurrencies usually a crypto coin, that is the basis for an option that is traded.
Up Trend
Another description of a bull market.
V
Volatility
Volatility describes fluctuations in an assets price. High volatility is signified by frequent substantial and sudden changes in price, while low volatility is signified by only infrequent and small changes in price.
Volatility Trading
Looking to profit based on fluctuations in price of an asset instead of its market direction.
Volume
The amount of traded coins per day, month or year.
W
Writer
A shorter term for option writer.
Y
Yield
Yield is the usually yearly generated profit generated from trading.
Z
Zero-Sum Game
A term used to describe that for every winner there needs to be an equivalent loser.