Trading glossary
113 definitions spanning strategy testing, trading, market structure, onchain rails, DeFi, wallets, and regulation. Each definition uses concrete examples and research context. Start with a category or jump straight to a term.
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Address Poisoning Address poisoning is a crypto scam where the attacker sends a tiny "dust" transaction from a wallet address that visually matches one of your recent counterp… Airdrop An airdrop is a free distribution of tokens, usually to a set of early users of a protocol or blockchain. Altcoin Altcoin is crypto shorthand for any coin or token that isn't Bitcoin. AML AML — "Anti-Money Laundering" — is the set of regulations requiring financial institutions to detect, prevent, and report suspicious transactions that could … AMM An automated market maker (AMM) is a DEX that prices trades against a pool of assets using a deterministic formula, rather than matching buyers and sellers v… Approval Drainer An approval drainer is a malicious smart contract that waits for a user to grant it token allowances, then sweeps those tokens into an attacker-controlled wa… APY APY (annual percentage yield) is the return on an investment over a year, accounting for compounding. Arbitrage Arbitrage is the practice of buying and selling the same asset at roughly the same time on different venues to capture a price gap.
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Backtest A backtest is a replay of a trading rule against historical market data to see when it would have fired and what happened afterward. Bear Market A bear market in crypto is an extended period of falling prices, typically 12-24 months, following a bull-run peak. Bearish Bearish describes a view or market condition expecting prices to fall. Blockchain A blockchain is an append-only database maintained by a distributed network of computers (nodes) that agree on its contents via a consensus mechanism. Bridge A bridge is a protocol that moves assets or messages between two blockchains. Bull Run A bull run is an extended period of rising prices across crypto markets, typically 12-24 months long. Bullish Bullish describes a view, position, or market condition that expects prices to rise.
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Call Option A call option gives the buyer the right, but not the obligation, to buy an asset at a specified strike price before expiry. Candlestick A candlestick is a single bar on a price chart representing the open, high, low, and close prices for a given time interval. CBDC A CBDC (Central Bank Digital Currency) is a digital form of a country's fiat currency issued directly by its central bank. CEX A CEX (centralized exchange) is a company-operated crypto trading venue that takes custody of users' funds. Coin A coin is the native asset of its own blockchain — BTC on Bitcoin, ETH on Ethereum, SOL on Solana. Cold Storage Cold storage is crypto custody where keys never touch an internet-connected device. Collateral Collateral is an asset posted to back a loan or derivative position. Consensus Mechanism A consensus mechanism is the protocol a blockchain uses to agree on the order and validity of transactions across its distributed validator set. Custodial Wallet A custodial wallet is one where a third party — usually an exchange or a fintech — holds the private keys on behalf of the user.
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Delegated Staking Delegated staking lets token holders assign their stake to a validator without running infrastructure themselves. DEX A DEX (decentralized exchange) is a smart-contract-based venue where users trade assets without handing custody to a company. DYOR DYOR — "Do Your Own Research" — is crypto shorthand for a warning that no one is responsible for your investment decisions but you.
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Finality Finality is the guarantee that a transaction, once included in a block, cannot be reversed. Flash Loan A flash loan is an uncollateralized DeFi loan that must be borrowed and repaid within a single transaction. FOMO FOMO — "Fear Of Missing Out" — is the psychological pressure that drives traders to buy rapidly-rising assets rather than miss the move. Funding Rate The funding rate is a periodic payment between long and short holders of a perpetual futures contract, designed to keep the perp's price anchored to spot. Futures Futures are contracts to buy or sell an asset at a future date for a price locked in today.
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Halving A halving is a scheduled reduction in a proof-of-work blockchain's block reward. Hardware Wallet A hardware wallet is a dedicated physical device that stores crypto private keys and signs transactions in an isolated environment. Hashrate Hashrate is the rate at which a mining network computes hashes per second. Hedging Hedging is opening a position specifically to offset downside risk in another position. HODL HODL is crypto slang for holding an asset through volatility rather than selling. Hot Wallet A hot wallet is a crypto wallet whose keys are stored on an internet-connected device — typically a phone, a computer, or a browser extension. Howey Test The Howey Test is the US Supreme Court's 1946 standard for determining whether an asset is a "security" under the Securities Act.
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Layer 2 A layer 2 (L2) is a blockchain that settles on a base-layer blockchain (L1) rather than maintaining its own independent security set. Lending Protocol A lending protocol is a DeFi application where users deposit crypto to earn interest from borrowers. Leverage Leverage is using borrowed capital to amplify position size beyond your own collateral. Liquid Staking Liquid staking is a DeFi primitive where users deposit a stakeable asset (ETH, SOL, ATOM) into a pool and receive a liquid token (stETH, mSOL, stATOM) that a… Liquidation Liquidation is the forced closure of a leveraged position when its margin falls below the exchange's maintenance requirement. Liquidity Pool A liquidity pool is a smart-contract-held reserve of two (or more) tokens that traders swap against. Long Position A long position profits when the asset's price rises. Look-Ahead Bias Look-ahead bias occurs when a historical test uses information that was unavailable at the time of a simulated decision. LTV LTV (loan-to-value) is the ratio of a loan's outstanding balance to the market value of the collateral backing it.
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Margin Call A margin call is a demand from an exchange or lender to post additional collateral when a leveraged position's margin falls below the maintenance requirement. Margin Trading Margin trading is any trade funded in part with borrowed capital. Market Cap Market cap is the total value of an asset's circulating supply, calculated as current price × circulating supply. Market Regime A market regime is a period when trading conditions share a recognizable pattern, such as rising or falling prices, high or low volatility, or deep or thin l… Memecoin A memecoin is a cryptocurrency whose value derives almost entirely from community attention, cultural resonance, and speculative coordination — not from unde… MEV MEV (maximal extractable value) is the profit a block producer can capture by reordering, inserting, or censoring transactions within a block. MiCA MiCA (Markets in Crypto-Assets Regulation) is the European Union's comprehensive crypto regulatory framework, fully applicable since December 2024. Mining Mining is the process of competing to produce the next block on a proof-of-work blockchain by solving computational puzzles. Mining Pool A mining pool is a cooperative of miners who combine hashrate and share block rewards proportional to contribution. Mnemonic "Mnemonic" is the technical term for what most users call a seed phrase — the 12 or 24 words that deterministically generate a wallet's private keys. Multisig A multisig wallet requires multiple signers to authorize a transaction.
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Onchain Rails Onchain rails are blockchain-based settlement and execution systems that record market activity on shared, auditable infrastructure. Open Interest Open interest is the total notional value of outstanding futures or options contracts — each long position has a matching short, and both count toward OI. Optimistic Rollup An optimistic rollup posts transaction batches to L1 assuming they're valid, with a challenge window (typically 7 days) during which anyone can submit a frau… Oracle An oracle is a service that brings off-chain data (prices, weather, election results, API responses) onto a blockchain so smart contracts can act on it. Order Book An order book is the real-time list of buy (bid) and sell (ask) orders for an asset, grouped by price level.
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Perpetual Futures Perpetual futures are derivative contracts with no expiry date. Phishing Phishing in crypto is an attack where someone tricks you into revealing your seed phrase or signing a malicious transaction. Pig Butchering Pig butchering (from Mandarin "shā zhū pán", 杀猪盘) is a long-form investment scam that pairs a romance or friendship con with a fake crypto trading platform. Prediction Market A prediction market lets participants trade contracts tied to future events, such as elections, policy decisions, economic releases, or protocol outcomes. Private Key A private key is the cryptographic secret that authorizes transactions from a specific blockchain address. Proof of Stake Proof of stake (PoS) is a consensus mechanism where validators lock tokens as collateral and are pseudo-randomly selected to propose and attest to new blocks. Proof of Work Proof of work (PoW) is a consensus mechanism where miners compete to solve a computational puzzle — finding a hash that meets a difficulty target — and the w… Put Option A put option gives the buyer the right, but not the obligation, to sell an asset at a specified strike price before expiry.
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Real World Assets Real-world assets (RWAs) are off-chain assets — US Treasuries, private credit, real estate, commodities, invoices — tokenized on public blockchains so they c… Rebase Token A rebase token automatically adjusts every holder's balance — not the price — to maintain a target. Restaking Restaking is the practice of using staked ETH (or a liquid staking token derived from it) to secure additional protocols beyond Ethereum itself. Rollup A rollup is a specific type of layer-2 blockchain that executes transactions off-chain but posts transaction data to an L1 for data availability and security. Rug Pull A rug pull is a crypto scam where the token's deployer drains the liquidity pool and disappears, leaving holders with a worthless token.
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Security Token A security token is a tokenized representation of a regulated security — equity, debt, or an investment contract — that explicitly complies with securities l… Seed Phrase A seed phrase is a 12 or 24-word sequence that deterministically generates every private key in a wallet. Self Custody Self-custody means holding your own private keys and bearing full responsibility for their security. Sharding Sharding is the partitioning of a blockchain's state and execution across multiple parallel shards to scale throughput. Shill In crypto, to shill a token is to promote it aggressively — usually without disclosing that you hold a position or have been paid. Short Selling Short selling is a trade that profits when the asset's price falls. Slashing Slashing is the penalty mechanism in proof-of-stake consensus: a validator that misbehaves — double-signs, violates surround-voting rules, or otherwise prova… Slippage Slippage is the difference between the expected price of a trade and the price you actually get. Smart Contract A smart contract is code deployed to a blockchain that runs when invoked and whose execution is guaranteed by the network's consensus. Spot Trading Spot trading is the direct exchange of one asset for another at the current market price, with immediate settlement. Stablecoin A stablecoin is a crypto asset designed to maintain a stable value relative to a reference asset — usually the US dollar. Staking Staking is the act of locking tokens as collateral to participate in a proof-of-stake consensus mechanism or to earn protocol rewards. Swap A swap is the direct exchange of one token for another on a DEX. Systematic Trading Systematic trading uses written, repeatable rules to decide when a market condition should trigger review, an alert, or a trade decision.
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Token A token is a digital asset issued on an existing blockchain, represented by a smart contract. Token Burn A token burn permanently removes tokens from circulation by sending them to an address nobody can recover from (often the zero address) or by calling a dedic… Token Unlock A token unlock is the scheduled release of previously-locked tokens — typically to team members, early investors, or ecosystem funds — that increases the cir… Tokenomics Tokenomics is the study of a crypto token's economic design — supply schedule, distribution, utility, value accrual mechanisms. Trading Strategy A trading strategy is a repeatable rule for deciding when to observe, alert, enter, reduce, or exit a position. TVL TVL (total value locked) is the dollar value of all assets held inside a DeFi protocol's smart contracts.
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Validator A validator is a participant in a proof-of-stake blockchain who locks tokens as collateral and is then eligible to propose or attest to new blocks. Vesting Vesting is a schedule that restricts when tokens granted to team members, investors, or advisors become available to sell. Volatility Volatility measures how much an asset's price moves, typically annualized and expressed as a standard deviation.
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Wallet A crypto wallet is a tool that stores private keys and signs transactions on behalf of a user. Whale A whale is an entity holding a very large position in a specific crypto asset — large enough that their trades can move prices. Wrapped Token A wrapped token is an ERC-20 (or equivalent) representation of another asset — either a non-native crypto asset brought onto a different chain, or a native a…