39 essential terms every trader should know — all in one place. Reference this while writing your trade journal or analyzing charts.
The first decentralized digital currency, created by Satoshi Nakamoto in 2009. Capped at 21 million coins, a new block is generated approximately every 10 minutes using a Proof of Work consensus algorithm. There is no central issuing authority — validators on a P2P network verify and record transactions.
An ordered sequence of blocks linked together by cryptographic hashes. Recorded transactions are practically immutable, and all network participants hold the same copy — making there no single point of failure. The foundational technology behind Bitcoin and most cryptocurrencies.
A tool for storing the private and public keys that prove ownership of cryptocurrency. Hot wallets (internet-connected) are convenient but carry security risks; cold wallets (offline hardware) are more secure but less accessible. Exchange wallets have the private key custodied by the exchange.
A platform where cryptocurrencies can be bought and sold. Centralized exchanges (CEX, e.g. Binance, Coinbase) are operated by companies with abundant liquidity but carry hacking and fund-freezing risks. Decentralized exchanges (DEX, e.g. Uniswap) operate via smart contracts without relying on a company.
The total estimated value of an asset, calculated as current price × circulating supply. Higher market cap generally means lower price volatility and richer liquidity. Bitcoin's share of total crypto market cap is called BTC Dominance, often used as a gauge of market risk appetite.
The number of coins actually tradable in the market. Issued coins that are locked, burned, or lost are excluded. Approximately 19.4 million Bitcoin (as of 2026) are in circulation, gradually converging toward the 21 million cap as mining continues.
An event roughly every 4 years where Bitcoin mining rewards are cut in half. Reduced new supply, if demand holds, creates upward price pressure. Past halvings (2012, 2016, 2020, 2024) have all been followed by bull markets — though past patterns don't guarantee future results.
Actually buying and holding cryptocurrency. Position value rises when price increases, but price drops won't trigger a forced liquidation — so you can hold long-term. No leverage; risk is limited to the price decline.
Contracts to buy or sell at a specified price at a future date. Leverage allows positions larger than your capital, amplifying both gains and losses. Quarterly futures have expiry dates; perpetual futures (dominant in crypto) do not.
Long bets that price goes up; Short bets that price goes down. Spot trading is effectively long-only, but in futures and margin trading you can go short by borrowing an asset, selling it, then buying it back cheaper.
A multiplier that lets you control a position many times larger than your own capital. 10x leverage means $10,000 capital controls a $100,000 position — a 10% price move equals 100% P&L on your capital. Higher leverage puts your liquidation price closer to entry, dramatically increasing risk.
The forced closure of a leveraged position by the exchange before losses consume all margin. Being liquidated means losing your entire margin. Liquidation price varies by leverage, margin mode, and exchange policy — always calculate it before entering.
A fee paid every 8 hours between long and short holders in perpetual futures to keep the price anchored near spot. Positive rate: longs pay shorts. Negative rate: shorts pay longs. Also widely used as a sentiment gauge for market positioning strength.
The total number of outstanding, unsettled contracts in the market. Rising OI indicates new capital entering the market — a potential signal of trend strengthening. Price up + OI up = trend strengthening. Price up + OI down = possible short squeeze unwinding.
The difference between the expected order price and the actual fill price. Especially common with market orders; most pronounced during low-liquidity periods or in illiquid pairs. Use limit orders or high-volume sessions to reduce slippage.
Orders that automatically close a position at a preset price. Stop loss caps losses; take profit locks in gains at the target to prevent greed. Setting both at entry is the simplest and most powerful discipline against emotional trading.
A chart form that visualizes the open, high, low, and close for a given time period. A long body signals strong one-directional buying or selling pressure during the period; long wicks signal fierce battle between buyers and sellers.
A line connecting the average closing prices over a given period. Simple Moving Average (SMA) and Exponential Moving Average (EMA) are the main types. Price above MA signals uptrend; below signals downtrend. Golden cross / death cross refers to short- and long-term MA crossovers.
A momentum indicator expressed between 0 and 100. Typically, above 70 is considered overbought and below 30 oversold. However, RSI can stay at extreme values for extended periods in strong trends — always combine with other indicators.
A trend indicator visualizing the difference between a short-term and long-term EMA. MACD line crossing above the signal line is read as a buy signal; below as sell. Divergence (price and MACD moving in opposite directions) is a frequently cited signal of potential trend reversal.
Price levels where price repeatedly bounces (support) or retreats (resistance). The more traders are aware of the same level, the stronger the self-fulfilling prophecy effect. Broken support often becomes resistance.
The amount of trading activity in a given time period. Price moves accompanied by rising volume carry conviction; price moves without volume should be questioned. OBV (On-Balance Volume) is an indicator that visualizes capital flow by accumulating volume.
A volatility indicator measuring the average daily price range. High ATR = active market, wider stop losses warranted. Low ATR = tighter stops. It can't predict absolute price levels, but it's critical for risk management and position sizing.
A tool for predicting how deep a pullback may go after a strong trend. Uses the 23.6% / 38.2% / 50% / 61.8% / 78.6% ratios as key levels. The value isn't in absolute precision — it's in the shared reference points that many traders watch simultaneously.
Publicly available data recorded on the blockchain — every transaction, wallet balance, and transfer flow. Analyzing exchange inflows/outflows, whale wallet movements, and long-term holder ratios reveals structural market pressure. More useful for medium-to-long-term trend analysis than short-term trading.
An individual or institution holding enough capital to meaningfully impact market prices. Wallets holding 1,000+ BTC are typically classified as whales. Whales depositing to exchanges is often read as a sell preparation signal; withdrawing from exchanges suggests long-term holding intent.
Bitcoin's share of total cryptocurrency market cap. Rising dominance signals a risk-off environment where capital flows into BTC. Falling dominance signals an altcoin season where capital spreads across smaller coins.
A 0–100 indicator of market sentiment. Combines volatility, volume, social mentions, BTC dominance, and Google Trends. Extreme Fear (below 20) is often viewed as a buy signal; Extreme Greed (above 80) as a signal to take profit.
The phenomenon where Bitcoin prices on Korean exchanges are higher than the global average. Caused by capital controls restricting foreign wire transfers. A large premium signals an overheated Korean market; a negative value indicates pressure from capital outflow.
An intentional misspelling of "hold" originating from an early Bitcoin forum post. Refers to the strategy of holding long-term without being shaken out by price swings — a philosophy opposing frequent trading, and a core part of Bitcoin community culture since its early days.
A strategy of buying a fixed dollar amount at regular intervals rather than trying to time the market. Keeps your average purchase price near the market midpoint and prevents emotional trading. Preferred by conservative long-term investors.
FOMO (Fear Of Missing Out) is the urge to chase a rising price out of fear of being left behind. FUD (Fear, Uncertainty, Doubt) is negative rumors or news that shakes the market. Both emotions are the biggest enemies of rational decision-making.
A rule that determines what percentage of capital to risk per trade. Typically designed so each trade risks no more than 1–3% of total capital — working backward from stop-loss distance and account size to determine how much to buy. The most fundamental variable in trading survival.
The ratio of potential loss to potential gain. A 1:2 ratio means risking a stop of 1 for a target of 2. With a good R/R ratio, a win rate below 50% can still be profitable over time.
The percentage decline in account balance from a peak. Maximum drawdown is the key metric for measuring the psychological and capital burden of a trading strategy. A 20%+ drawdown requires a 25%+ gain just to break even — the burden accelerates sharply.
Both determine trading performance. A 60% win rate with a 0.5 average win/loss ratio loses money. A 30% win rate with a 5:1 ratio profits. Identify through your trade journal which side your strategy is stronger on — and optimize accordingly.
At 10x leverage, a 10% price move = 100% loss of capital. In volatile crypto markets, leverage above 10x carries extremely high short-term liquidation risk. Beginners should start with 1–3x or less.
Not concentrating capital in a single asset, exchange, or time point. Apply multiple layers: asset diversification (BTC + ETH + alts), time diversification (DCA), and custody diversification (exchange + cold wallet). The goal is loss minimization, not return maximization.
A log of each trade's entry rationale, result, emotion, and market conditions. The most powerful self-improvement tool for statistically identifying your patterns (session win rates, frequency of emotional trades, etc.). AMA automatically accumulates all paper trades into your journal.
