One of the reasons why some investors feel wary about cryptocurrency is because the terminology feels alien. A brand new concept that relies on a new form of tech (blockchain) & comes with its own set of terms can be a bit much to process all at once. As a result, people shy away from cryptocurrencies & place their faith in investment avenues that they do understand.
One of the ways to dispel this sense of confusion is to explain the popular cryptocurrency terms. This article covers the popular trading terms related to cryptocurrency. Watch out for the next one too where we cover the generic terms!
A cryptocurrency exchange is a website where you can sell or buy different cryptocurrencies. CoinBase is an example of an exchange.
Fiat refers to the legal tender of a country. It is a government issued form of currency. An example of a fiat currency is the dollar.
A whale refers to someone who owns very large amounts of cryptocurrency. A few examples of people who are considered Bitcoin Whales are the Winklevoss Twins, Tim Draper, and Satoshi Nakamoto.
Limit Buy/Limit Sell/Limit Order
Think of these as ‘for sales’ signs that you may see outside a home or store. These refer to orders that are placed by different traders to sell or buy a cryptocurrency only when it reaches a specified amount. The orders are basically what are sold or bought against once the traders place market orders.
Buy Wall/Sell Wall
In order to buy or sell cryptocurrencies, traders must be able to see the limit buy and sell orders. These limits are represented in the form of graphs for traders to decide their next course of action.
Market Sell/Market Buy/Market Order
This refers to the sale or purchase on any exchange website at the current price of the cryptocurrency. A market buy refers to a purchase on the basis of the lowest ETH on an order book. Market sells, on the other hand, refers to a purchase on the most expensive ETH on an order book.
The term bullish is used to indicate that the price of a cryptocurrency is about to increase. Similarly, the term bearish is used to indicate that the price of a cryptocurrency is about to decrease.
Going long/going short
Going long refers to any margin trade that will profit when the prices increases. Going short refers to any margin trade that will profit when the price decreases.
Any coin apart from Bitcoin is considered an Altcoin. A few examples of Altcoins include Ethereum, Ripple, Monero, Dash, and so on.
When someone advertises another cryptocurrency, it is known as shilling. A great way to know if someone is shilling is if they make wild promises like how rich you are going to be.
FUD stands for Fear, Uncertainty, and Doubt. People who spread FUD are known as FUDSTERS. The people who do so generally want the price of a specific currency to drop, which is why they spread baseless negativity.
Market Cap refers to the total value of any cryptocurrency. The total supply of the currency multiplied by the price of one coin indicates the market cap.
Pump and Dump
Pump and Dump refers to a recurring cycle faced by AltCoins. In this, the popularity of an AltCoin increases suddenly, which then increases its price. This is then followed by a huge crash.