Trading Term List

 

BTC is the ticker for Bitcoin.

 

USD represents the US Dollar. Throughout this guide, the term ‘USD’ will represent any stable coin or fiat currency that BTC is traded to. 

 

Bid is a request to buy at a specified price.

 

Ask is an offer to sell at a specified price (also known as an ‘Offer’).

 

Spot Trading is the purchase of an asset with immediate delivery. This is an unleveraged type of trading where selling will immediately give you USD and buying will immediately give you BTC. 

 

Derivatives Trading is the leveraged trading of contracts that involve a price at which you will be liquidated. A commonly traded derivatives contract is BTCPERP on FTX. 

 

A Market Order (also called a taker order) is an order that executes immediately at the best bid if you choose to sell and at the best ask if you choose to buy. Almost always, these orders carry higher fees than limit orders. 

 

A Limit Order (also called a maker order) is either a bid that you set below the current price or an ask that you set above the current price. This order will only trigger at the price you set it at. Almost always, these orders carry lower fees than market orders.

 

A Bull is one who expects the price to rise.

 

A Bear is one who expects the price to fall. 

 

Long Position is one who buys to establish a market position that profits as the market rises. Entering and exiting long positions is what this guide will cover. 

 

Short Position is one who sells to establish a market position that profits as the market falls. It is not possible to short spot. 

 

A High Tail is a candlestick formation that forms when price closes drastically below its candlestick high. Tails are also called wicks or shadows. Typically a bearish signal.

 

A Low Tail is a candlestick formation that forms when price closes drastically above its candlestick low. Typically a bullish signal.

 

Stop Loss is a market order to buy or sell when the market reaches a specific point with the intention of limiting losses. A stop loss order to buy (used if a trader entered a short position) becomes a market order when price reaches the most available offer price at or above the stop price. A stop order to sell (used if a trader entered a long position) becomes a market order when price reaches the most available bid price at or below the stop price. 

 

Confluence occurs when multiple indicators overlap within a price area. When this occurs, that price area has a greater likelihood of becoming a support/resistance level.

 

Altcoin, or ‘Alternative Coin’, is a coin that is not listed as one of the major cryptocurrency coins by market cap, typically traded to BTC or to another coin.

 

Liquidity refers to the amount of volume that can be transacted at a price, either from an asset being converted into cash (such as selling Bitcoin and receiving fiat), or from cash (such as buying Bitcoin and selling fiat) being converted into an asset. 

 

High liquidity refers to large transactions that do not cause a substantial change in price. Large market cap coins tend to be highly liquid.

 

Low liquidity refers to large transactions that do cause a substantial change in price. Small market cap coins tend to be highly illiquid.

 

Support refers to a price level where price has historically had difficulty falling past.

 

Resistance refers to a price level where price has historically had difficulty rising past.

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