Category: Cryptos 101

Before you learn to trade it is important to familiarise yourself with the various terminolagies, here are a few of the most important terms and explanations. Bitcoin = 100 million Satoshis 1 million bits Exchange- A market place which permits buying and selling of bitcoin and various other coins.eg  Binance, ku coin coinbase etc FOMO-Fear of missing out on a trade, a common mistake made by all beginers, entering a trade without doing propper research in the fear of missing prifits. Total supply - The amount limit of coins that will ever exist. Bull- Is someonbe execting the market price to go higher, bear is the opposite. A bull market is where the prices are seing a continuous uptrend leading to new hights being created ,usually when new investors enter a market. Bear market, is where there is a long term downtrend leading to a sell off. Bubble - A situation where the prices are irationaly high as compared to the actual value of the asset. FUD-Fear uncertanty and doubt Day trading-Taking a position in the market,either buy or sell and exiting in the same day. Swing trading-This method looks for buying and seling possitions in a weekly range. Swing traders make two to three trades a week. Positional Trading - The idea is to buy monthly lows and hold them for days, weeks and even months.  This is a longer term trading period. Leverage - refers to the extra amount assist bought or sold over your capital limit eg: if you by $2000 of bitcoin with a capitial of a $1000 you have a leverage of 2x. Margin - The amount of funds required to open a leverage trade eg: if you want to open a position of a $1000 with a leverage of 5x your margin requirement would be $200. $200 x 5 =$1000 Long Position - This is a by position buy with leverage eg: if you have $1000 as capital you could buy $2000 with a bitcoin with leverage or even more. Both profit and loss in this case is multiplied by the leverage you take. Eg: a 10% rice/fall in price in case of a long position with 2x leverage will lead to 20% profit or 20% loss. Short Position - Exact opposite of long entry.  You enter a short entry when you expect the prices to fall. Shorting allows you to make money in a bare market. Volatility - It is a percentage movement in price of a asset over a period.  A balance volatile asset gives ample opportunity to short and long.  Traders look for predictable volatility.  A very high volatile or low volatile asset isn't concidered good for trading. Roe - means return on equity.  This is calculated by the actual capital employed in a trade and not through leverage.  OHLC - Open, High, Low and close. Altcoin - All coins except bitcoin. Bulltrap - a technique used by market makers to buy a huge amount suddenly, spiking the price, this makes everyone else think that this is a breakout and everyone buys.  The market makers than sell enormous amounts pushing the price down, in turn liquidating everyone else that had bought, producing a cascading effect on liquidations. Bear Trap - Is just the opposite of the above for making the price go higher in the end. Ask/Bid - Sell orders are asks and buy orders are bids. Spread - The difference between what the sellers are ready to sell at and what the buyers are ready to buy at. There always exists a small spread on all exchange, the higher the liquidity, the lower the spread. Support and resistance - A support is a zone/line where we can expect the price to bounce back up.  Resistance is a line/zone where we can expect the price to rebound downwards. Walls - Extremely large orders at a range. Demand Zone - A zone with huge buy orders.  This is determined through the heat map. Supply Zone - A zone with huge sell orders.  This is determined through the heat map. Stop-loss:  Order that is triggered when the price goes below this point.  Used to cut losses. Support/Resistance: Liquidity - The measure of how actively the coin is being traded in the market. A high liquidity coin/exchange has many buyers and sellers at the same time, making it easier to acquire or sell the coin at any time. Uptrend - A price is said to be in an uptrend when it is making higher highs and higher lows. It can be confined in a channel. Downtrend - Opposite of uptrend, the prices here make lower highs and lower lows. Consolidation - A period where the price is ranging in a well- defined region.  This is a period of indecision and generally leads to a volatile in either directions. Correction - A correction is a fall in price after making a new peak or an upwards rally. Many authors define the correction as 10% drop from all time high but its arbitrary. Sideways market - an indecisive market which isn't leading to a breakdwon or a Breakout, and not giving any signals in either way. Sell off - Profit taking after the rally in price, which leads to lowering of price of the asset. Rally - An upward trend leading to increase in price of the asset.  Can happen in both bear and bull market. Accumulation: the process by which one builds a position in an asset. Pattern - A chart pattern is a predefined shape that have been historically studied by technicians.  Traders try to use previous performance statistics to predict future price movements. Eg: A head and shoulders top is considered bearish. Fractal: A pattern of Price movement which has occurred earlier and might occur again. Limit Order: Order will execute at a predefined price, if the market reaches that price. Market order: An order to buy or sell at the current price level, executed immediately. Time Period/Time Frame - The time spread of each candle stick in a chart. Common time periods are 15 min, 30min, 1 Hour, 4 Hour, Daily and so on. ATH - All time high prices. Average Down: Trying to lower the average entry cost of a position by slowly buying the asset at reducing rates. Liquidation - When you are stopped out of your position because the trade went in the opposite direction and your margins are not big enough to carry the trade anymore. Arbitrage: A method of making profit using the pricing difference between exchanges Eg: If bitcoin is trading a $10,000 on Bitstamp and $10,100 on Bitfinex, People will buy from Bitstamp and sell on Bitfinex. Credits Emperor.