Basic Trading Definitions
Basic Trading Definitions

Basic Crypto Trading Definitions

Trading is a difficult form of making money, like any other business. People who start trading for easy money end up all the same: professional burnout & the deposit lost. Most people have too high expectations that have nothing to do with reality.

First thing you need to start trading — is to get familiar with the major professional terms. Let’s go ahead!

The most important crypto trading definitions

What is liquidity?

Liquidity — is the ability to place an order, in other terms, to make a purchase of an asset. If a trader wants to purchase a large number of stocks (or crypto assets) and able to do this, then it’s a liquid asset.

Otherwise, if trader can’t buy a large amount of stocks, it’s non-liquid asset.

What is volatility?

  • volatility — is a price change.
  • sharp growth or reduction of an asset price means high volatility. This is typical for cryptocurrencies
  • if price stuck at the same point for a long time, we would call it low volatility.
Bitcoin volatility example
Bitcoin volatility example

P.S.

Needless to say, what you saw on the chart above happens every day and our team knows how to make money on it. You will see it for yourself, just follow @thecoiner telegram channel and be open to new information.

What is an Order in Trading?

To put things simple — order is a command to buy or sell an asset.

Initially, making a trade seems very simple:

  • Click the “Buy/Long” button to buy
  • Click the “Sell/Short” button when it’s time to sell.

What is Short?

  • Short is an asset sell, expecting its price reduction
  • When a trader opens a short position, he borrows an asset and sells it. Let’s make an example. ETH (Ethereum) costs $3000. Trader borrows 1 ETH. The next day asset price drops to $2500, and the trader decides to return the debt. In that case, he needs to return $500 less, than he borrowed — so, he makes a profit. Otherwise, if the price goes up and the trader has a short position, he will lose money.

What is Long?

  • Long — is asset purchase with an expectation of its price growth
  • Profit volume depends on how much price has increased
Long and short positions in Binance interface
Long and short positions in Binance interface

Basic Crypto Trading Definitions: Type of orders

  • Market order
  • Limit order
  • Stop-order

Market order

Market order — (this is the main order type) is the fastest and most reliable way to enter or exit a position. According to it, the broker/exchange buys or sells at the best price currently available. The order interface includes Buy/Long and Sell/Short buttons, which makes it easy and quick to use. Typically, this order is executed immediately. The main advantage of a market order is a guaranteed trade. If a trader needs to enter or exit a position, a market order is the most reliable option.

Disadvantage of market order

One of the main market type order disadvantages is an execution price. In some cases, it could not match the real market price. Especially in the case of high-volatile markets.

Below you can see how to open market order on Binance:

Basic Crypto Trading Definitions: how to open a market order
Basic Crypto Trading Definitions: how to open a market order

Limit Order

  • A limit order is an instruction to buy or sell a crypto asset at a specific price. Unlike a market order, where a trader can simply click “buy” and let the market “pick” a price, when using a limit order, the trader must specify the desired price.
  • The limit order will be executed only if the price reaches the specified level.
  • The trade will be missed if the price moves far from the limit price before the order can be executed.

To open a limit order on Binance you just need to select the respective type and input desirable price:

Basic Crypto Trading Definitions: How to Open a Limit Type order on Binance
Basic Crypto Trading Definitions: How to Open a Limit Type order on Binance

Stop Order

A stop order is an instruction to close a position when the price reached a certain level. It could be a ‘Take Profit’ order or a ‘Stop Loss’ order. Imagine, that you bought some crypto asset at $1. You expect the price goes up to $1.6. In that case, you can set a ‘Take Profit’ order at $1.6 and it will be executed automatically when the price reaches this level. As well, if you care about your risks, you can set up a ‘Stop Loss’ order at, for example, $0.9 to not lose more than 10% of your position.

Basic Crypto Trading Definitions: Conclusions

  • Learning — is the first step to success in trading. 95% of new traders lose their money because of a lack of basic tradings skills
  • Trading does not equal betting. Trading has a forecasting logic while betting — not.
  • Small losses are part of the game, but at the same time, you can earn a monthly salary within one trade, having the right signal.

If you have read up to this point you already better than 99% of people because you want to learn and earn money with us.

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