cryptotradingbook

Glossary

One page per term: short definition, example, common misconceptions, related chapters.

B

C

  • Candlestick - A chart element showing open, high, low and close for one period.
  • CASP - Crypto-Asset Service Provider licensed under MiCA in the EU.
  • Cold wallet - A wallet with keys generated and stored offline.

D

  • DCA - Dollar-cost averaging: buying fixed amounts on a schedule.
  • DCA vs. lump sum - Whether to invest a sum at once or spread it out.
  • DeFi - Decentralized finance: trading/lending via smart contracts instead of intermediaries.
  • Depeg - When a stablecoin loses its peg.
  • DEX - Decentralized exchange trading via smart contracts without custody.
  • Drawdown - The decline from a peak to a trough, usually in % of account.

E

  • Expectancy - Average result per trade: win% × avg win − loss% × avg loss.

F

  • Fill or kill (FOK) - Execute the whole order immediately or cancel it entirely.
  • FOMO - Fear of missing out: entering because the price is rising without you.
  • FUD - Fear, uncertainty, doubt - often spread to shake out holders or to promote an alternative.
  • Funding rate - Periodic payment between perpetual futures holders to keep the price near spot.

G

  • Geo-blocking - Blocking access to a service based on the user's location.

H

  • Hardware wallet - A physical device that stores keys offline and signs transactions.
  • Hot wallet - An internet-connected wallet (exchange custody or software wallet).

K

  • KYC - Know Your Customer: identity verification (document, often proof of address) required before full trading access.

L

  • Leverage - Trading with borrowed funds, multiplying both gains and losses.
  • Limit order - Buys or sells at a specified price or better; may not fill at all.
  • Liquidation - The exchange force-closes a leveraged position when margin is exhausted.
  • Liquidation price - The price level at which a leveraged position is force-closed.
  • Liquidity - How much can be traded without moving the price materially.
  • Loss streak - A sequence of losing trades; statistically normal in any strategy.

M

  • Maker and taker - Maker adds liquidity to the book (limit orders); taker removes it (market orders).
  • Margin trading - Trading with borrowed capital using your assets as collateral.
  • Market order - Buys or sells immediately at the best available price.
  • Max supply - The maximum possible token count under the protocol's rules.
  • MiCA - The EU's Markets in Crypto-Assets regulation for licensed crypto services.

O

  • OCO order - One-Cancels-Other: a pair of orders where filling one cancels the other.
  • Offshore exchange - An exchange licensed nowhere of substance, often registered in island jurisdictions.
  • On-chain analysis - Reading blockchain data (flows, balances, costs) for market context.
  • Order book - The live list of open buy and sell orders for a trading pair.

P

  • Paper trading - Trading with simulated money to practice mechanics.
  • Passkey - A phishing-resistant login based on public-key cryptography.
  • Perpetual futures - Futures contracts without expiry, kept near spot via funding.
  • Phishing - Fraud that imitates trusted services to steal credentials or keys.
  • Position sizing - How much to buy so the loss at the stop equals your planned risk.
  • Proof of reserves - Exchange attests it holds client assets, ideally with liabilities shown (Merkle tree or audit).

R

  • Risk/reward ratio - The relation between the loss if the stop is hit and the gain if the target is hit.

S

  • Sanctions - Government lists (e.g. OFAC SDN, EU) prohibiting dealings with named entities.
  • Scalping - Very short trades capturing tiny moves, fee-sensitive.
  • Seed phrase - The 12/24-word master key for a self-custody wallet.
  • Self-custody - Holding your own keys instead of trusting an exchange.
  • Slippage - Difference between expected and executed price, typically on market orders.
  • Spread - The gap between the best bid and best ask; a hidden cost of instant trades.
  • Stablecoin - A token pegged to a fiat currency or asset.
  • Staking - Locking tokens to support a proof-of-stake network for yield.
  • Stop-limit order - A stop trigger that places a limit order instead of a market order.
  • Stop-loss - An order that triggers a market/limit order when price reaches a level, capping the loss.
  • Support and resistance - Price zones where buying or selling historically absorbed moves.
  • Survivorship bias - Judging by the visible winners while the dead are missing.

T

  • Tokenomics - A token's supply schedule, distribution and incentive structure.
  • Trading journal - A written record of trades, reasons, and rule adherence.
  • Trailing stop - A stop that follows the price at a fixed distance, locking in gains.
  • Travel rule - Regulation requiring exchanges to share sender/receiver data on transfers.
  • Two-factor authentication (2FA) - A second login/signing factor beyond the password.

V

  • Volatility - How much price swings; crypto's defining feature.
  • Volume - The amount traded in a period; validates price moves.
  • VPN - Virtual Private Network: routes your traffic through another location.

W

  • Wash trading - Fake volume created by trading with yourself to appear liquid.
  • Whale - An entity holding enough assets to move prices with its transactions.