Crypto Trading Glossary

A

Accumulation

A phase where buyers quietly build positions, often after a downtrend, before a move higher. The opposite of distribution.

All-Time High (ATH)

The highest price an asset has ever traded at. Common shorthand in crypto.

Altcoin

Any cryptocurrency other than bitcoin. Most are smaller, newer and more volatile, and they tend to fall harder than bitcoin in a sell-off. Crypto risk and diversification

Annualised Funding

A funding rate scaled to a year so venues and settlement intervals compare: the rate per settlement multiplied by settlements per year. The 0.01% per 8 hours default equals +10.95% a year. Funding rates explained

Ask

The lowest price a seller is currently willing to accept. You buy at the ask.

Asset Allocation

How you split your money across different assets, such as bitcoin, smaller coins and cash, to balance risk and reward. Risk and diversification

ATR (Average True Range)

A measure of how much an asset typically moves over a period. Used to set stop distances that respect volatility: the desk places every stop between 1 and 3 ATR from entry. How calls are graded

B

Backtesting

Testing a trading strategy against historical price data to estimate how it would have performed before risking real money.

Basis

The gap between a futures or perpetual price and the spot price. Called the premium when the contract trades above spot. Perpetual futures explained

Bear Market

A prolonged period of falling prices, often defined as a drop of 20% or more from recent highs.

Bid

The highest price a buyer is currently willing to pay. You sell at the bid.

Blockchain

The shared, tamper-resistant digital ledger that records cryptocurrency transactions across a network of computers.

Break of Structure (BOS)

When price breaks a prior swing high or low, signalling a potential shift in trend direction.

Breakout

When price moves decisively beyond a level it had been stuck under or above. Real breakouts expand; many are traps. How to trade breakouts

Bull Market

A prolonged period of rising prices and optimism.

Bull Trap

A false breakout above resistance that lures buyers in, then reverses. A bear trap is the same below support.

Buy the Dip

Buying an asset after a short-term fall, on the view that the longer-term trend remains up. Powerful in a real uptrend, dangerous in a downtrend.

C

Call Option

A contract giving its buyer the right to buy at a set price, the strike, until expiry. Crypto options explained

Candlestick

A chart symbol showing the open, high, low and close for a period. The core unit of price reading. How to read a candlestick chart

Capital Gain

The profit made when you sell an asset for more than you paid. In the UK, selling, swapping or spending crypto can count as a disposal for Capital Gains Tax, so keep records of every trade. Records and tax

Coinbase Premium

How far bitcoin's price on Coinbase sits above or below Binance's, both in dollars. Positive means US buyers are paying up. The Coinbase premium

Cold Wallet

A wallet whose keys are kept offline, usually on a hardware wallet, so they cannot be reached over the internet. Wallets and self-custody

Compounding

Earning returns on your past returns, so growth accelerates over time. Losses compound too: a 50% fall needs a 100% gain to get back to even. Compounding and drawdowns

Consolidation

A period where price trades sideways in a tight range, often before a larger move.

Crowded Trade

A trade too many people hold on the same side. In perps it shows up as extreme funding plus a surge in open interest, and it can unwind violently. Crowded trades

Cryptocurrency

A digital asset secured by cryptography and recorded on a blockchain, such as Bitcoin or Ethereum. Crypto for beginners

D

Day Trading

Opening and closing trades within the same day, holding no positions overnight.

DeFi (Decentralised Finance)

Financial services such as lending and trading built on blockchains, run by code rather than traditional institutions. Higher risk and largely unregulated.

Depeg

When a stablecoin trades away from the price it aims to hold, usually 1 US dollar. TerraUSD collapsed in May 2022 after it lost its peg. Stablecoin risk

Displacement

A sharp, forceful move that leaves an imbalance behind. Used to grade the quality of order blocks.

Distribution

A phase where large holders quietly sell into strength, often near a top, before a move lower. The opposite of accumulation.

Divergence

When price and a momentum indicator disagree, a warning that the current move may be tiring. Reading momentum

Diversification

Spreading money across assets so no single loss can sink you. Most coins move with bitcoin, so holding many of them diversifies less than it seems. Crypto risk and diversification

Dollar-Cost Averaging (DCA)

Investing a fixed amount on a regular schedule regardless of price, which removes timing and emotion. Dollar-cost averaging

Drawdown

The drop from a peak to a trough in an account or asset, usually shown as a percentage.

DVOL

Deribit's volatility index for bitcoin and ether: the 30-day implied volatility priced into options, as an annual percentage. Divide by about 19 for the typical daily move it implies. Max pain, put/call and DVOL

E

Equity

Ownership in an asset. In a trading account it means your balance including unrealised profit and loss.

Exchange

A platform where you buy, sell and trade crypto. A custodial exchange holds your coins for you until you withdraw them. Crypto exchanges and fees

F

Fair Value Gap (FVG)

A price imbalance left by a fast move that the market often returns to fill. Also called an imbalance. Fair value gaps explained

Fibonacci Retracement

A tool that marks potential support and resistance at ratios (38.2%, 61.8%) of a prior move.

Fundamental Analysis

Judging an asset by its underlying value, such as a network's usage, fees and supply schedule, rather than its chart.

Funding Rate

A periodic payment between longs and shorts on a perpetual future that keeps its price near spot. Positive means longs pay shorts; negative means shorts pay longs. Funding rates explained

Futures

A contract to buy or sell an asset at a set price on a future date. Often leveraged. Crypto's most traded version never expires: the perpetual future. Perpetual futures explained

G

Gap

A jump in price between one candle's close and the next candle's open, leaving empty space on the chart. Rare in crypto, which trades around the clock, but common on CME bitcoin futures over weekends.

Going Long

Buying an asset expecting its price to rise.

Going Short

Selling a borrowed asset expecting to buy it back cheaper. Profits from a falling price.

H

Halving

The event, roughly every four years, when the number of new bitcoin created per block is cut in half. Bitcoin's supply is capped at 21 million coins. Crypto for beginners

Hardware Wallet

A small device that stores your keys offline and signs transactions without exposing the keys to your computer or phone. Wallets and self-custody

Hedge

A position taken to offset risk in another, like a short perp held against coins you own. It trades some upside for protection.

Higher High / Higher Low

The pattern of an uptrend: each peak and each dip is higher than the last.

HODL

Crypto slang for holding an asset through volatility rather than selling. From a misspelling of 'hold'.

Hot Wallet

A wallet whose keys sit on a device connected to the internet, such as a phone app or browser extension. Convenient for small amounts. Wallets and self-custody

I

Implied Volatility

The size of future price moves that option prices assume, expressed as an annual percentage. High implied volatility means options are expensive. Max pain, put/call and DVOL

Index

A single number that tracks a group of assets or prices, such as an average of one coin's spot price across several exchanges.

Index Price

An average of one coin's spot price across several exchanges. Perpetual futures are tied to it through funding. Perpetual futures explained

Inflation

The gradual rise in prices that erodes the buying power of cash over time.

Invalidation

The price or condition that proves a trade idea wrong. Defining it before entering is essential.

L

Leverage

Controlling a position larger than the money you put up. It magnifies both gains and losses. Perpetual futures explained

Limit Order

An order to buy or sell only at a specified price or better.

Liquidation

The forced closing of a leveraged position when its margin can no longer cover losses. A liquidated long becomes a market sell. Crowded trades and liquidations

Liquidation Cascade

A chain reaction where forced closes push price into the next group of liquidation levels, forcing more closes. Crowded trades and liquidations

Liquidity

How easily an asset can be bought or sold without moving its price. Also refers to clusters of orders price is drawn to.

Liquidity Sweep

A quick move that triggers a cluster of stop orders beyond a level before reversing.

Long Liquidation

Price down with open interest down over the week: longs closing, by choice or by force. The daily issue calls it longs leaving. Open interest explained

Long/Short Ratio

The share of accounts on an exchange that are net long divided by the share that are net short. It counts accounts, not money. Crowded trades

M

MACD

Moving Average Convergence Divergence, a popular momentum indicator built from moving averages.

Margin

The collateral you put up to hold a leveraged position. If it falls below the maintenance margin, the exchange liquidates the position. Perpetual futures explained

Mark Price

The fair value an exchange uses for unrealised profit and loss and for liquidations, built from an index of spot prices so one stray trade cannot liquidate anyone. Perpetual futures explained

Market Capitalisation

The total value of a coin's circulating supply: its price multiplied by the number of coins in circulation.

Market Maker

A firm that continuously quotes buy and sell prices, providing liquidity so others can trade. It profits from the spread.

Market Order

An order to buy or sell immediately at the best available price.

Market Structure

The pattern of highs and lows that defines whether a market is trending or ranging. Support and resistance

Max Pain

The option strike where buyers, taken together, would collect the least at expiry. A summary of where open interest is stacked, not a magnet for price. Max pain explained

Memecoin

A coin built around a joke, meme or online community rather than a use. Its price runs almost entirely on attention and can collapse quickly. Common crypto investing mistakes

Momentum

The rate of change of price. Strong momentum means a move is accelerating. Reading momentum

Moving Average (MA)

The average price over a set number of periods, used to smooth noise and define trend.

N

Network Fee

The fee paid to a blockchain's miners or validators to process a transaction. On Ethereum it is often called gas. Crypto exchanges and fees

New Longs

Price up with open interest up over the week: buyers opening fresh positions. Open interest explained

New Shorts

Price down with open interest up over the week: sellers opening fresh positions. Open interest explained

O

Open Interest

The total size of derivatives positions still open. It rises when new money arrives and falls when positions close. Open interest explained

Options Expiry

The moment options settle. Deribit's crypto options expire at 08:00 UTC, with the largest expiries on the last Friday of the month. Crypto options explained

Order Block (OB)

A price zone where large orders were placed, often acting as future support or resistance. What is an order block

Overbought / Oversold

Conditions where an indicator suggests price has risen or fallen too far, too fast. Not an automatic signal.

P

Paper Trading

Practising trades with fake money in a simulator, so you can learn the mechanics and test ideas without real risk. Trading for beginners

Percentile

Where a reading ranks against its own history. Funding in its 95th percentile for the month has been higher only 5% of the time in the last 30 days. Funding rates explained

Perpetual Future (Perp)

A futures contract with no expiry date, held open for as long as you keep enough margin. Funding payments keep its price near spot. Perpetual futures explained

Phishing

A fake website, email or message made to look like a real exchange or wallet, built to steal your login or seed phrase. Crypto scams

Portfolio

The full collection of assets you own.

Position Sizing

Deciding how much to risk on a trade so a single loss never sinks the account. Position sizing

Pound-Cost Averaging

The UK name for dollar-cost averaging: buying a fixed amount on a regular schedule, whatever the price. Dollar-cost averaging into crypto

Price Action

Reading raw price movement and structure on a chart, rather than relying on indicators.

Proof of Reserves

An exchange publishing evidence that it holds the customer assets it owes. A useful check, but it may not show what the exchange owes elsewhere, so it is not a guarantee. Choosing an exchange

Pullback

A temporary move against the trend before it resumes. Often a lower-risk entry.

Pump and Dump

A scam where promoters hype an asset to inflate the price, then sell into the buying, leaving latecomers with losses. Common in low-cap crypto.

Put Option

A contract giving its buyer the right to sell at a set price, the strike, until expiry. Crypto options explained

Put/Call Ratio

Put open interest divided by call open interest. Above 1, more puts are open than calls. More useful as a change than as a level. Max pain, put/call and DVOL

R

R Multiple

A trade's result measured in units of the risk taken. Risk 1R and hit a target twice as far away and you made 2R; get stopped and you lost 1R. Every desk call is graded this way. How calls are graded

Rally

A sustained upward move in price.

Range

A market moving sideways between a clear floor and ceiling rather than trending.

Recession

A significant, broad decline in economic activity lasting months, often defined as two consecutive quarters of shrinking output.

Resistance

A price level where selling has tended to halt advances. Support and resistance

Retest

When price returns to a broken level to confirm it now acts as support or resistance.

Risk Management

The discipline of controlling how much you can lose. The foundation of lasting trading. Risk management

Risk-Reward Ratio

How much you stand to make versus lose on a trade. A 1:3 risk-reward risks 1 to make 3.

RSI (Relative Strength Index)

A momentum oscillator from 0 to 100 used to gauge the speed and size of price moves.

Rug Pull

A scam in which the people behind a token or project take the money and disappear, leaving holders with a coin worth little or nothing. Crypto scams

S

Scalping

Very short-term trading that aims for small, frequent gains over seconds or minutes.

Seed Phrase

A list of words, usually 12 or 24, that can restore a wallet. Anyone who has it controls the coins, and no legitimate company will ever ask for it. Wallets and self-custody

Self-Custody

Holding the keys to your own crypto instead of leaving it on an exchange. It removes the risk of the exchange failing and makes you responsible for the keys. Wallets and self-custody

Sentiment

The overall mood of the market, from fear to greed. Extreme sentiment in either direction often precedes a turn.

Short Covering

Price up with open interest down over the week: shorts buying back to close. A real rise, but fuelled by traders leaving. Open interest explained

Short Selling

Selling an asset you do not own, by borrowing it or through a perpetual future, to profit from a falling price. Higher risk, as losses are open-ended.

Short Squeeze

A sharp rally that forces short sellers to buy back to cut losses, which pushes price even higher in a feedback loop. Crowded trades and liquidations

Slippage

The difference between the price you expected and the price you actually got on a trade.

Smart Contract

A program that runs on a blockchain such as Ethereum and executes automatically when its conditions are met. Most tokens and stablecoins are smart contracts. Crypto for beginners

Spot Price

The current price to buy or sell an asset for immediate delivery, as opposed to a futures or perpetual contract price.

Spread

The gap between the bid and the ask. A cost you pay on every trade.

Stablecoin

A cryptocurrency pegged to a stable asset such as the US dollar, used to park value and margin trades in crypto markets. Stablecoin supply

Stablecoin Supply

The total value of stablecoins in existence. It rises when dollars come into crypto and falls when they leave. Stablecoin supply

Staking

Locking up certain cryptocurrencies to help run the network in exchange for rewards, a little like earning interest. It carries its own risks.

Stop Loss

An order that closes a trade at a set price to cap your loss.

Support

A price level where buying has tended to halt declines. Support and resistance

Swing Trading

Holding trades for days to weeks to capture larger moves than day trading.

T

Take Profit

An order that closes a trade at a set price to lock in a gain.

Technical Analysis

Studying charts and price patterns to anticipate future moves.

Ticker

The short symbol that identifies an asset, such as BTC for Bitcoin or SOL for Solana.

Timeframe

The period each candle represents, from one minute to one month. Higher timeframes carry more weight.

Trailing Stop

A stop loss that follows price as it moves in your favour, locking in gains while giving the trade room to run.

Trend

The general direction of price: up, down or sideways. The trend is the context for every trade. Trends and ranges

Two-Factor Authentication (2FA)

A second step at login, such as a code from an authenticator app, so a stolen password alone cannot open your account. Wallets and self-custody

V

Volatility

How much and how quickly a price moves. Higher volatility means bigger swings and more risk.

Volume

The amount of an asset or number of contracts traded in a period. Confirms the strength behind a move.

VWAP

Volume-Weighted Average Price, the average price weighted by volume. A key intraday reference level.

W

Wallet

Software or hardware that stores the keys to your cryptocurrency. The coins stay on the blockchain; the wallet holds what controls them. Wallets and self-custody

Watchlist

A curated list of assets you are monitoring for setups.

Whale

A holder large enough to move a market with their trades, a term used most often in crypto.

Wick

The thin line above or below a candle body, showing the high and low that price rejected.

Y

Yield

The income an asset produces, such as staking rewards or lending interest, as a percentage of its value.