Crypto trader vocabulary
- Crypto trader vocabulary
- All time high
- Automated Trading
- Averaging Down
- Bear trap, bull trap
- Bull vs Bear market
- Circulating, total, and maximum supply
- Coin cap
- Congestion area
- Day traders vs position traders vs buy-and-hold traders
- Fiat money
- FOMO - Fear of Missing Out
- FUD - Fear, Uncertainty and Doubt
- Fundamental analysis
- Long Position
- Margin Short (Shorting)
- Margin trading
- Market order vs limit order
- Market phases
- Order book, bid and ask
- Order book depth
- Pump And Dump
- Sell wall
- Short selling the trend
- Stop Losses
- Support and Resistance
- Technical Analysis
- Testing markets
The process by which one builds a position in a coin.
All time high
ATH - the highest the price has ever been.
Arbitrage is the simultaneous purchase and sale of an asset to profit from an imbalance in prices on different exchanges.
Automated Trading – trading done by a script with little to no human interaction.
The process of lowering the average entry cost of one's position by buying lower incrementally.
A position in a coin.
Bear trap, bull trap
A bear trap is a false signal that the rising trend of a stock or index has reversed when it has not.
A bull trap is a false signal indicating that a declining trend in a stock or index has reversed and is heading upwards when, in fact, the security will continue to decline.
Bull vs Bear market
A bull market is a financial market of a group of securities in which prices are rising or are expected to rise.
A bear market is characterized by falling prices and typically shrouded in pessimism.
Circulating, total, and maximum supply
Circulating supply - the amount of a coin currently available for transactions.
Total supply - the amount of a coin currently in existance.
Maximum supply - the maximum amount of a coin that can ever come into existence.
Selling and buying climax: fireworks (more volatile) in prices, high or extremely high volumes. Could be any time frame.
Microcap - 0-25BTC
Lowcap - 25-250BTC
Midcap - 250-2500BTC
Highcap - 2500+BTC
Congestion areas - densely populated areas, with traders locked in a variety of weak positions,
and therefore any break away from these areas requires high volume.
Congestion areas: low -> lower -> higher, or high -> higher -> lower.
A correction is a reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation. Corrections are generally temporary price declines interrupting an uptrend in the market or an asset.
Day traders vs position traders vs buy-and-hold traders
Day traders - those people who are in and out of a trade during a single day.
Day traders is also known as an active traders.
Position traders - those who hold the trade longer than a day but not forever.
Decentralized exchange, example: Bitshares.
The process by which one reduces one's position in coin.
Fiat money is a currency without intrinsic value established as money by government regulation or law.
FOMO - Fear of Missing Out
This is a term used to describe the act of purchasing a commodity while it is on a bull run. It often carries a negative connotation, in that FOMO may cause the price to be artificially high and indicate that a correction is coming.
A pattern of price-action that is observed to be repeating (or have repeated) on any scale.
FUD - Fear, Uncertainty and Doubt
This term is used to describe the malicious spread of negativity. This is often done with the goal of causing inexperienced members to sell, or possibly cause a temporary dip in price.
The evaluation of a coin based on its intrinsic properties, its prospects, its utility and its community, as well as macro facts, such as the economic and sectoral landscape.
- block reward, coin supply, premine
- block explorers and rich lists
Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price.
The act of buying and holding. A play on the world hold
Helps to se the large story the market is telling.
Insiders are simply playing on the emotions of the markets which are driven by fear and greed.
Making a purchase with the hope that the item will increase in value so it can be sold for a profit. This is what most investors do.
Margin Short (Shorting)
This is the act of selling something that you’ve borrowed with the hope of being able to buy it back later at a lower price.
Margin trading refers to the practice of using borrowed funds from a broker to trade a financial asset. Since such use of financial leverage can potentially magnify gains but could also saddle the trader with devastating losses.
A market is the combined behavior of thousands of people responding to information, misinformation and whim.
Market order vs limit order
The primary advantage of a limit order over a market order is that the limit order guarantees market entry at the trader's specified, desired price.
Market phases or stages of a trend:
- public participation
Accumulation: insiders actively buying.
Public participation: technically oriented investors begin buying.
Distribution: uninformed investors and novices believe the market will continue going up.
The smart money and the dumb money swapping hands.
There are two basic types of options:
Order book, bid and ask
Bitcoin Trading: Interpreting Order Books
An order book is a ledger containing all outstanding orders – instructions from traders to buy or sell bitcoin.
bid - an order to buy.
ask - an order to sell.
- market order (buy or sell immediately for the best available price)
- limit order (buy or sell a set number of bitcoins at a specified price or better)
Order book depth
Order book depth (total quantity of orders) can be used as a way to quantify the market’s intentions to buy and sell.
Pump And Dump
Pump and dump is a scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements.
When demand is greater than supply, then prices will rise to meet this demand, and conversely, when supply is greater then demand, then prices will fall.
The list of addresses found on a coin's block explorer that depicts the largest holders of that coin and their transactions.
ROI - return-on-investment.
A large investor might be trying to move the market.
Sell walls create an impression of a strong supply. This makes some people, unwilling to wait for the wall to break down, pitch their sales offers below the wall. By moving the wall closer to the current bid again, a large investor might be able to move the market to a small extent and then buy at a lower price. The investor's goal is to move the market, not to actually sell his supply at that price, so when the price gets too close, such walls often disappear or move to a higher price. Especially, if you see the same amount popping up at different prices, there is probably someone trying to move the market without actually fulfilling orders or bids.
See What is the strategy behind a sell wall?.
If a trader wants to place orders at pre-determined price points, he can do so automatically without showing his orders on the books by using simple trading software. That said, there are some advantages that would lead a trader to reveal his intentions by placing large, public limit orders.
Large limit orders are often placed to advertise intention and to affect the distribution of orders around the wall. Traders will often move orders ahead of the wall to get executed first.
Short selling the trend
Is one of the strategies to make money in a declining market.
Selling at the highs, buying back at the lows.
Margin account is required.
Land n shares -> return the same number later. But the price of them will be less.
If the price drops more than 6% to 8% then there is a valid reason for that much decline.
Support and Resistance
These terms are used by traders to refer to price levels on charts that tend to act as barriers from preventing the price of an asset from getting pushed in a certain direction.
Price levels simply represent the "extreme" psychological levels of fear and greed.
Price consolidation creates invisible barriers which are then densely populated with both weak and strong groups of traders,
and which then become platforms either of support or resistance during future market activity.
Price levels those have historically been reliable points at which market participants have heavily bought or sold.
Financial analysis that uses patterns in market data to identify trends and make predictions.
Testing: the worst thing that can be happen to insiders is they begin to move the market higher but hit by waves of selling, which would drive the market lower undoing all the hard work of shaking the sellers.
By time period: primary, secondary and minor.
The primary trend is the most important of the three tends. It is the granddaddy of the three trends, and will dictate whether you make money or not.
Volume confirms primary trend.
Significant lows or highs must be used to to draw a trend line.
Volume is the total amount of anything swapped around in a certain period of time. An exchange usually shows it’s own volume for each crypto, that is the amount traded on that particular exchange, normally in the last 24hr unless it says otherwise.
Volume reveals whether the price action is valid or false:
- if a price was moving on low volume, then there could be many different reasons
- if a price move is associated with high or rising volume - a valid move
- if the price continue moving in one direction, with associated supporting volume - signal of the start of a trend
In a manipulated market, volume reveals the truth behind the price action.
In a pure market, volume reveals the truth behind market sentiment and order flow.
If the volume is low, then, clearly, the insiders are not buying at this level.
Break on low volume is a trap move.
If the cause if large, then the effect will be large as well.
See also Volume.
Traders with massive amounts of the currency being traded. They are able to sell and buy in quantities large enough to manipulate the market price in the short term.