Crypto Trading Glossary

Any cryptocurrency other than Bitcoin — the term covers everything from Ethereum to meme tokens.

A sustained period of declining prices and negative sentiment — typically defined as a 20%+ decline from recent highs.

The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask) — a hidden cost on every trade.

A programmed event occurring approximately every 4 years where the Bitcoin block reward paid to miners is cut in half — reducing new supply issuance.

The minimum win rate needed for a strategy to break even given its risk/reward ratio — below this, the strategy loses money long-term.

When price moves decisively above resistance or below support, often accompanied by increased volume — signalling a potential new directional trend.

A sustained period of rising prices, broadly positive sentiment, and increasing trader confidence — typically defined as a 20%+ rise from a recent low.

Reinvesting profits so future returns are calculated on an ever-growing base — generating exponential growth over time.

A period where price moves sideways within a defined range after a directional move — often preceding the next trend leg.

The original purchase price of an asset, used to calculate capital gains for tax purposes and to measure the profitability of a position.

A margin mode where your entire account balance is shared as collateral across all open positions — improving liquidation resistance but increasing interconnected risk.

The maximum percentage or dollar loss allowed within a single trading day — a hard limit used by most prop firms to prevent catastrophic single-day losses.

Financial services — lending, borrowing, trading, yield — built on blockchain smart contracts, operating without banks or centralised intermediaries.

An investment strategy where you buy a fixed dollar amount of an asset at regular intervals, regardless of price.

The percentage decline from a peak equity value to a subsequent trough — measures how much your account has lost from its highest point.

The average outcome of a strategy over many repetitions — positive EV means profitable long-term, negative EV means losing long-term.

A periodic payment between long and short holders in perpetual futures markets that keeps the contract price close to the spot price.

Crypto slang for holding an asset long-term regardless of price volatility — derived from a misspelling of 'hold' in a 2013 Bitcoin forum post.

A weighted average of an asset's price across multiple major spot exchanges — used as the basis for mark price and liquidation calculations in futures markets.

A margin mode where only the funds specifically allocated to one position are at risk — losses are capped at your deposited margin for that trade.

A multiplier that lets you control a larger position than your deposited capital — amplifying both gains and losses.

The price at which your leveraged position is forcibly closed by the exchange to prevent negative balance.

How easily an asset can be bought or sold without significantly moving its price — high liquidity means tight spreads, fast fills, and low slippage.

A trade that profits when the asset price goes up — you buy expecting the price to rise.

The minimum account balance required to keep a leveraged position open — falling below this triggers liquidation.

The fee charged when you place a limit order that adds liquidity to the order book — typically lower than taker fees as an incentive for providing liquidity.

The collateral you deposit to open and maintain a leveraged trading position.

A notification from your exchange that your account equity has fallen too low to support your open positions — requiring you to add funds or face liquidation.

A fair-value price calculated from multiple spot exchanges that exchanges use for liquidation — preventing manipulated wicks from triggering false liquidations.

The total value of all circulating coins for a cryptocurrency — calculated as current price × circulating supply.

The total number of outstanding derivative contracts (futures or options) that have not been settled — a measure of market participation and sentiment.

A real-time list of all pending buy and sell orders on an exchange, organised by price level — the visible supply and demand for an asset.

The different instructions you can give an exchange to buy or sell — market, limit, stop, stop-limit, and trailing stop orders each serve a distinct purpose.

A derivative contract that lets you speculate on an asset's price with leverage — with no expiry date, kept in sync with spot via a funding rate.

Calculating how much of your account to risk on a single trade to keep losses within your predefined risk limit.

The percentage of profits a funded trader keeps versus what the prop firm takes — typically 80–90% to the trader.

The percentage gain required to pass a prop firm evaluation phase — typically 8–10% for Phase 1 and 4–5% for Phase 2.

A paid evaluation where traders prove they can hit a profit target while respecting drawdown limits — passing earns a funded account.

A unit of measurement expressing trade outcomes in terms of initial risk — a +2R trade means you made twice your risk amount.

The actual profit or loss locked in after closing a position — the real, permanent result of a trade.

The system of rules and practices a trader uses to protect capital — encompassing position sizing, stop-loss placement, drawdown limits, and maximum daily loss rules.

The maximum percentage or dollar amount of your account you are willing to lose on a single trade — the foundation of sound position sizing.

The ratio between the potential loss on a trade and the potential profit — e.g. 1:2 means risking $1 to make $2.

A high-frequency trading style that targets very small price moves, often holding positions for seconds to minutes, relying on volume to accumulate profits.

A trade that profits when the asset price goes down — you sell a contract expecting the price to fall.

The difference between the expected price of a trade and the actual price at which it executes — caused by market movement between order placement and fill.

A cryptocurrency designed to maintain a stable value, typically pegged 1:1 to the US dollar.

A drawdown limit calculated from your initial starting balance — it does not change as you make profits, giving you a fixed floor throughout the challenge.

An order that automatically closes your position at a specified price to limit losses on a trade.

Price levels where the market has historically reversed or stalled — support is where buyers have stepped in, resistance is where sellers have emerged.

A medium-term trading style that holds positions for hours to days, targeting larger price moves with better risk/reward than scalping.

An order that automatically closes your position at a target price to lock in gains.

The fee charged when your order immediately fills against existing orders in the book — you are 'taking' liquidity by demanding immediate execution.

A drawdown limit that follows your account's highest equity point upward but never moves down — making your floor progressively tighter as profits grow.

The profit or loss on an open position that has not yet been locked in by closing the trade — calculated using the current mark price.

The degree of price variation over a given period — high volatility means larger, faster price swings; low volatility means stable, slow-moving prices.

A trader or entity holding a large enough position to influence market prices through their buying or selling activity.

The percentage of trades that end in profit — used alongside R:R to determine whether a strategy has a positive expected value.