The terminology used in cryptocurrency trading can be intimidating at first, but don’t worry; it will become more apparent as time goes on. Many phrases used in cryptocurrency trading stem from computer programming and have been used for a long time.
Other more recent bitcoin trading buzzwords are made up of slang words or phrases that have gained popularity among cryptocurrency users. In this article, we’ll go over the top 10 cryptocurrency trading terms you should be familiar with before you start trading.
1. Arbitrage
Arbitrage is the practice of profiting on the difference in price between two distinct exchanges in the cryptocurrency world. If bitcoin is trading for £7.950 on one exchange and £8,000 on another, a trader can buy bitcoin on the first exchange and sell it for a profit on the second.
2. ATH
The term “all-time high” is abbreviated “ATH.” It is a useful term to know if you’re interested in following the digital currency markets. Because these assets are so volatile, it’s crucial to remember their ATH. Before reaching a new all-time high, a digital currency could set multiple local highs.
3. Bear/Bearish
“Bears” believe that a particular asset, such as a digital currency, will lose value. Another way of saying it is that a trader’s mood toward a cryptocurrency is “bearish” if they believe it will deteriorate. Traders will often take advantage of this anticipation by taking a short position on an asset, which means they will place a bet that will pay off if the asset in question loses value.
4. Bull/Bullish
A trader is a “bull” if they feel the value of an asset will rise. The term “bullish” refers to an investor’s enthusiastic forecast of an asset’s future bullish performance. Several individuals who begin investing in cryptocurrencies tend to have a bullish attitude towards investments and wish to go long on their market positions.
5. Exchanges
Exchanges are essentially markets where traders can transact in digital currencies. If someone wants to acquire bitcoin, the quickest way to do so is to go to a cryptocurrency exchange. Trading cryptocurrency is possible through trading exchanges and bot software. Visit this site to start exploring the cryptocurrency trading world.
6. FOMO (Fear Of Missing Out)
The expression “fear of missing out” is referred to as “FOMO.” It occurs when investors begin purchasing a particular asset with the hope that its value will increase. If an asset has significant gains, market investors are likely to rush to it.
It’s dangerous to get caught up in FOMO. Specifically, buying an asset just because it had a significant increase in value might lead to market manipulation. The 2017 Bitcoin rush, which saw the coin rise from $900 to $20,000 in a year, is an excellent example of FOMO.
Because of the euphoria surrounding the new asset, the 2017 Bitcoin Bull Run was dubbed FOMO-driven. Overbuying eventually resulted in a sharp drop in value to $3,200 in 2018. Since then, the digital currency and its investors have grown and are now witnessing a new era of growth.
7. FUD
The acronym “FUD” stands for “fear, uncertainty, and doubt.” The premise is that market participants may circulate false or erroneous information in order to drive down the price of an item. A trader may want the price of an asset to decline so that they can successfully short it or buy it at a lower price and boost their chances of making a profit.
8. HODL (Hold On for Dear Life)
It is a misspelled variant of the word “hold,” as you may have guessed. So, why is it that it’s misspelled throughout the crypto-verse? In late 2013, as the coin’s value was collapsing, one GameKyuubi, a Bitcoin forum user, claimed to have drunkenly announced that he was “hodling” onto his BTC.
The phrase HODL came to represent the range of complicated emotions that all long-term Bitcoin investors go through as the coin’s value increases and falls. HODLers are in the market for the long term and do not react to market volatility with fear. A majority of Bitcoin HODLers are cryptocurrency maximalists.
9. Market Volatility
The volatility of the bitcoin market is well-known. Depending on the type of trader you are, this trait is both a strength and a drawback. The market’s volatility will appeal to a short-term day trader looking to make a quick buck on rapidly shifting prices. When the price of a crypto asset moves quickly, it can make a lot of money.
When prices take a significant fall in a short period of time, the same process can result in losses. The volatility, on the other hand, has little impact on long-term investors. They’re in it for the long haul and are referred to as HODLers in the bitcoin world. Bitcoin, for example, is viewed as a store of value rather than a trading tool by this group. Swing and day trading, which rely on volatility to make money, are less appealing to them.
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10. Position: Long/Long
Going long, also known as holding a long position, entails betting on an asset’s value rising. When a trader buys a digital currency like bitcoin, they are betting that it will grow in value.
Taking a long position can be as simple as purchasing digital money, but there are other options. Traders, for example, can use options and futures as leverage to grow their investment holdings.
Conclusion
Certain jargon is specific to digital currency; thus, traders researching other asset classes such as equities, bonds, and commodities are unlikely to have picked it up. Those considering investing in cryptocurrencies should keep in mind that understanding industry jargon can be highly advantageous.
Would-be traders can improve their chances of attaining their investment goals by conducting the appropriate study and understanding this information.
