Trading Terminologies

TABLE OF CONTENTS

• Address
• Agency Orders
• Alt Coins
• Arbitrage
• Ask Price
• Base currency
• Bear Market
• Bid- Ask Spread
• Bid Price
• Broker
• Bull Market
• Buy Stop-limit Order
• Buyer
• Byzantine Fault Tolerance
• Candlestick Charts
• Day Trading
• Derivatives
• Fill or Kill
• Front Running
• Futures
• Gas
• Halving
• Insider
• Insider Trading
• Latency
• Limit Order
• Limit Price
• Liquidity
• Long Position
• Lower Circuit Limits
• Margin trading
• Market if Touched
• Market Order
• Mining
• Options
• Order Book
• Principal
• Private Keys
• Public Keys
• Pump & Dump
• Satoshi
• Sell Stop-limit Order
• Seller
• Short Position
• Spoofing
• Spread
• Stable coin
• Stop Loss
• Stop Price
• Trade Execution
• Trading pairs
• Trailing Stop
• Upper Circuit Limit
• Volatility
• Volume

Address

An identifier typically made up of alphanumeric characters that signify where cryptocurrency will be sent.

Agency Orders

Orders that a broker dealer executes for the account of a customer with another professional or retail investor.

Alt Coins

The abbreviation for 'alternative coin', referring to cryptocurrencies other than Bitcoin.

Arbitrage

Deterministic Arbitrage-Consists of buying a crypto on 1 platform/ exchange and selling it in another market with the sole purpose of making a profit.

Ask Price

Ask price is the price at which the seller is willing to sell a particular asset. It is also known as offer price.

Base currency

The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency. Currency pairs compare the value of one currency to another—the base currency (or the first one) versus the second or the quote.

Bear Market

A weak or falling market characterised by dominance of sellers.

Bid- Ask Spread

The difference between the price at which someone is willing to buy asset and the price at which someone is willing to sell asset is called spread. 

Bid Price

Bid price is the highest price that a buyer is willing to pay to purchase a particular asset.

Broker

A crypto broker serves as a middleman between the person buying and the person selling the cryptocurrency.

Bull Market

A rising market with abundance of buyers and less sellers.

Buy Stop-limit Order

A Buy stop-limit order is triggered when the last traded price reaches or exceeds the stop price of the order. For a Buy stop limit order, the limit price must be greater than or equal to stop price.

Buyer

A buyer is anyone who is willing to buy a crypto using either FIAT or another crypto.

Byzantine Fault Tolerance

In short, Byzantine Fault Tolerance is where a blockchain can keep functioning if some of its participants (nodes) fail or are attacked.

Candlestick Charts

Candlestick charts are useful for active day traders. It provides 4 pieces of information – Open, high, low, close and forms bullish and bearish candles on a chart.

Day Trading

Day trading is the practice of buying and selling an asset before the market closes. It is also known as intraday trading. For example, if you buy an asset in the morning, then sell it for a profit in the afternoon, you have day traded.

Derivatives

Futures, options, swaps & perpetual contracts are types of derivatives in Crypto trading.

Fill or Kill

is an order to buy or sell an asset that must be executed immediately in its entirety; otherwise, the entire order will be cancelled.

Front Running

is the practice by market-makers of dealing on advance information provided by their brokers and investment analysts, before their clients have been given the information.

Futures

Crypto futures trading is a type of trading that mimics futures trading in the mainstream markets. It involves using futures contracts, which are legal agreements to buy or sell an asset in the future at a predetermined price.

Gas

A fee for validating a transaction. This cryptocurrency term is mostly used for Ethereum.

Halving

A feature written into Bitcoin's code in which after a certain number of blocks are mined (typically every four years) the amount of new Bitcoin to be released into circulation will be halved.

Insider

An “insider” is an officer, director, 10% stockholder and anyone who possesses inside information because of his or her relationship with the Company or with an officer, director or principal stockholder of the Company.

Insider Trading

Insider trading involves trading in a public company's stock by someone who has non-public, material information about that stock for any reason. Insider trading can be either illegal or legal depending on when the insider makes the trade.

Latency

Latency in computing refers to the time delay between an input and the received output.In cryptocurrencies, latency can refer to two different time delays. The first is the latency in the network of a blockchain, and the second is the latency on an exchange.

Limit Order

A limit order is a type of order where a predetermined price is set to buy or sell an asset. So, even if the price of an asset is Rs 100 currently, you can set a limit order to buy it at Rs 95. When the asset price touches Rs 95, your order would be executed.

Limit Price

The price at which the stop-limit order (buy/sell) is placed in the order book.

Liquidity

Liquidity of a asset refers to the ability to be bought and sold quickly. If there are lots of buyers and sellers the asset will have high liquidity. A highly liquid asset helps you enter and exit a trade easily.

Long Position

A long position means when you buy an asset expecting the price to increase. In simple terms: 

Long Position = Buy 

When you have a long position on an asset, then you will make profits when the asset's price increases. 

Lower Circuit Limits

A lower circuit is the opposite of an upper circuit. A lower circuit is the minimum price to which an asset is allowed to fall in a single trading day.

Margin trading

Margin trading in crypto involves borrowing funds from an exchange and using it to make a trade.

Market if Touched

Order is a conditional order that becomes a market order when a security reaches a specified price, even if it does so only briefly.

Market Order

Market order type helps you buy an asset at the current market price. So, if the asset price is Rs 100 and you place a market order. The order will be executed at the current price of the asset.

Mining

The process of validating a block in return for the block reward. In Crypto it basically means "Creating new tokens".

Options

A stock or crypto option is a contract that gives you the right but not the obligation to buy or sell an asset at a specific price.

Order Book

An order book is a list of buy and sell orders for a specific financial asset, organised by price level. It's a constantly updating (real-time) tool that allows you to see the existing orders for a particular security.

Principal

Principal is most commonly used to refer to the original sum of money borrowed in a loan or put into an investment.

Private Keys

This is what you use to access your wallet where you store your cryptocurrency. Only you should have access to your private keys. If someone else gets hold of them, they can steal your cryptocurrency.

Public Keys

This is the key that you share with people so you can receive cryptocurrency.

Pump & Dump

Pump and dump is a form of securities fraud that involves artificially inflating the price of an owned asset through false and misleading positive statements, in order to sell the cheaply purchased asset at a higher price. 

Satoshi

A Satoshi is the smallest denomination of Bitcoin and is equivalent to 100 millionth of one Bitcoin. It was named after Bitcoin’s creator, Satoshi Nakamoto.

Sell Stop-limit Order

A Sell stop-limit order is triggered when the last traded price reaches or falls below the stop price of the order. For a Sell stop-limit order, the stop price must be less than the last traded price.

Seller

A seller is someone who is willing to sell his crypto for FIAT or another Crypto.

Short Position

A short position means when you sell an asset expecting the asset price to fall further. In simple terms: 

Short Position = Sell

You can also do short selling.

Spoofing

is done by deliberately placing several buy or sell orders with the knowledge that they will not be executed. Unrealistic orders feed the market with a false sense of supply or demand.

Spread

Spread is the gap between the highest bid offer and the lowest ask offer on an order book. In simpler terms, it is the difference between the price at which people are willing to buy an asset and the price at which people are ready to sell an asset.

Stable coin

A cryptocurrency that is supposedly tied to the value of something else, such as the US dollar, to make it more stable and less volatile in price swings.

Stop Loss

A stop loss is where a trader can limit his/her losses by exiting the trade if the asset moves against your expectation. A stop loss can save you from heavy losses if the price of an asset rises or falls suddenly.

Stop Price

When the last traded price reaches a given stop price, your stop order (buy/sell) will be triggered at that specified price.

Trade Execution

Trade Execution is the completion of a purchase or sale order for security. If you are using a robust trading platform like Samco’s assetNote app, the trade execution takes place within seconds.

Trading pairs

They consist of two assets that can be traded with each other on an exchange and are also used to quote one crypto against the other. A cryptocurrency pair allows each asset in the pair to be valued without using fiat money.

Trailing Stop

is a modification of a typical stop order that can be set at a defined percentage or dollar amount away from a security's current market price. For a long position, an investor places a trailing stop loss below the current market price.

Upper Circuit Limit

An upper circuit is the maximum price up to which a asset is allowed to move in the upward direction on a trading day. For example, if the price of a asset is Rs 100, it can move upward by a maximum of 20% in a single trading day.

Volatility

Volatility refers to the fluctuation in the prices of the asset. The assets that have steady movements are known as less volatile assets. If an asset that rises and falls frequently, it is known as volatile asset.

Volume

Crypto trading volume measures how many times a coin changes hands over a given time frame. Investors analyze crypto volume baked on either trades taking place on a given crypto exchange or on all exchanges combined.