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Crypto Trading Glossary

At Quadency, we work hard to make the more technical elements of the platform easier to follow. Even then we understand trading jargon can be confusing, particularly when it comes to automation.

So to help we've created this central Glossary to explain many of the terms you will come across while trading with Quadency.

Last updated on June 21, 2022

Airdrop: An Airdrop occurs when a cryptocurrency platform or application simultaneously “drops” their crypto tokens into the wallets of their users or a select group. Airdrops are generally used for marketing promotions, building awareness, or boosting adoption for a new coin.

Algorithmic trading: A trading process in which a computer program follows a defined set of instructions to place a trade. It is also known as bot trading or algo-trading.

All time High (ATH): The ATH refers to a digital asset’s highest price ever on a given exchange or market.

Allocation: The allocation is the distribution of your portfolio assets.

Altcoin: An Altcoin is cryptocurrency that is alternative to Bitcoin: Ethereum (ETH), Polkadot (DOT), Solana(SOL) and others are Altcoins.

Amount Per Order: Enter the amount or quantity of base currency to use for limit orders. For example, if you're trading BAT/BTC, enter the number of BAT for each order.

API Keys: An API (Application Programming Interface) is a way for systems to communicate with each other. API keys are used to authenticate users and identify what account is being accessed. API Trading at Quadency is another way to use API Keys.

Arbitrage / Arb Trades: Cryptocurrency arbitrage is a trading strategy where the trader buys a crypto asset on one exchange and sells it quickly on another exchange for a higher price. Arb traders try to capitalize on price differences that may exist only for microseconds to make many potential small gains that combine for larger long-term profits.

Backtesting: Backtesting is a method of predictive modeling that allows you to test out how well a trading strategy would have performed using historical data.

Base/Quote Currency: The base currency is the one you want to buy or sell. For each pair the Base currency is priced in a Quote currency. For example, if you're trading ETH/BTC, ETH is the base currency: it's the one you buy or sell. Meanwhile, BTC is the quote currency, you will buy ETH using BTC or receive BTC if you sell ETH.

Bear Market: A Bear Market is a negative trend of a market. During a bear cycle, prices are declining or are expected to decline.

Bid-Ask Spread: The bid-ask spread is the amount by which the ask price exceeds the bid price for an asset in the market. In other words, it is the difference between the lowest price someone is willing to sell and the highest price a buyer is willing to pay.

Bitcoin: Bitcoin (BTC) is an open source software and blockchain network that enable a global peer-to-peer payment system that is censorship resistant and deflationary by design.

Bollinger Bands: Bollinger Bands is a technical indicator developed by John Bollinger. It is used to measure a market’s volatility and identify “overbought” or “oversold” conditions.

Bots: Trading bots are automated trading software that execute trades extremely quickly, based on a preset algorithm.

Bull Market: A Bull Market is a positive trend of a market. During a Bull Market, prices are rising or are expected to rise.

Candle Timeframe: This is the bar timeframe on which to apply the technical indicator used in the strategy to make buy/sell/hold decisions. Signals for trading are generated at the end of each bar/candle. Shorter timeframes will result in more frequent trades and longer timeframes in fewer.

Candlestick Charts:
Candlestick charts are financial charts that track the price movements of a security or crypto asset. Every candlestick represents a specified time frame and consists of two parts: the "body" which means the opening and closing price, and the "wick" representing the highest and lowest purchase/sold price..

Capital Gains & Losses: Depending on your region, crypto assets may be considered property, collateral, or similar to a stock. In these cases, profits you realize by cashing out your crypto must be reported as capital gains for the purpose of paying taxes on your cryptocurrency profits. Traders calculate cost basis by subtracting profits from the purchase price and fees to determine capital gains.

Cost Basis: Cost basis must be calculated to determine your capital gains and losses for any given tax year. Cost basis equals the original purchase price of an asset when acquired, plus purchase fees. Traders subtract the cost basis from the proceeds when they sell to determine capital gains or losses for crypto taxation purposes.

Cryptocurrency: A cryptocurrency, or digital currency, is a currency secured by a cryptographic protocol and is typically used as a medium of exchange within a peer-to-peer economic system.

Decentralized Autonomous Organization (DAO): A DAO is an automated system of coordination for businesses in the blockchain age. A DAO is governed by smart contracts, a DAO token, and a network of people with a common goal.

Decentralized Finance (DeFi): DeFi is an ecosystem of decentralized financial services built on top of blockchain networks.

Decentralized Exchange (DEX): DEXs are similar to their centralized counterparts. However, all trades are on-chain transactions and no one takes custody of your funds.

Derivatives: Derivatives are a financial contract between two parties to buy or sell an asset at a specific price and on a specified future date. When purchasing the derivative, traders are buying a contract to buy at the agreed upon price and date, and not the underlying asset itself. Derivatives like futures, options, and perpetual contracts are used to hedge risk and/or speculate.

Distance Between Buy Orders: Percent offset (in decimal form) for the first buy/sell order from the midpoint. The same distance is applied between the following buy/sell orders.

Distance Between Grids: The distance between grid lines used to place orders on. This is also known as profit per grid.

Divergence: The divergence is when the price of an asset and a technical indicator are heading in opposite directions.

Dynamic NFTs:
Dynamic or "living" NFTs can have changing metadata based on various conditions and external sources and are programmed via a smart contract. An example would be a PFP NFT of a sport's star whose face changes from a smile to a frown depending on a recent game outcome.

DYOR: DYOR is an acronym for “Do Your Own Research”. It is a popular phrase used by cryptocurrency enthustiats.

Ethereum: Ethereum (ETH) is an open source software, cryptocurrency, and blockchain platform that enables the creation of crypto tokens and provides a system of smart contracts to manage tokenomics, incentives, and platform governance. The Ethereum Network is host to the majority of today’s decentralized applications (dApps).

Exchange: An Exchange is a third party platform that facilitates the trading of cryptocurrencies.

Exchange token: An exchange or platform token is a cryptocurrency that is native to a particular exchange. Generally, exchange tokens are used to provide lower fees and additional services to crypto traders who use the exchange token.

Exchange Traded Fund (ETF): A security that tracks a basket of assets such as cryptocurrencies but can be traded like a single stock.

FIAT: A Fiat is a currency that a government has declared to be legal tender: USD, EUR, JPY, etc.

Floor Price:
The floor price for an NFT collection is the lowest active listing price in the collection. Floor prices adjust in real-time; for instance, when an NFT is purchased, the price may fall as new listings are added at a price below the previous floor.

FOMO: Fear of Missing Out (FOMO) is when anxiety over missing out on something creates irrational thinking and may cause you to buy or sell an asset at the top of the market cycle, often when prices are at their highest.

Fork: A fork is an alternate version of a blockchain. After a fork two blockchains run simultaneously. For example, Bitcoin Cash (BCH) is a fork of the Bitcoin (BTC) chain.

FUD: Fear, uncertainty and doubt (FUD) is a strategy of spreading false or misleading information to influence the perception of a particular topic or asset. As a crypto trading term, it’s used widely in reference to negative news about the cryptocurrency industry.

Fundamental Analysis: Fundamental Analysis is the process of evaluating an asset based on its underlying characteristics and traits as an effort towards arriving at an intrinsic value of the asset. It is often opposed to Technical Analysis.

Gas: It refers to the fee required to make a transaction or execute a contract on the Ethereum blockchain.

General Settings: On Quadency, general settings are the same for every pre-built strategy available in our library: Configuration name, exchange, account and market.

Grid Trading: Grid trading is a popular strategy that consist of placing orders above and below a set price, creating a grid of orders at incrementally increasing and decreasing prices. This strategy capitalize on the normal volatility of the market.

Gwei: The denomination used in defining the cost of gas in transactions involving Ethereum, 1 gwei = 0.000000001 ETH.

Halving:
A halving, or halvening, is a programmatic event that occurs with the Bitcoin Network (and its forked relatives like Zcash and Litecoin). The halving refers to the mining rewards, which are cut in half at each halving event. The Bitcoin halving occurs about every four years until there are no mining rewards and all 21 million Bitcoins have been mined.

HODL (Hold On for Dear Life): HODL is coming from a misspelling of "hold" which refers to buy-and-hold Bitcoin and other cryptocurrencies rather than trading or selling.

Ichimoku Clouds: Ichimoku Clouds are a set of technical indicators that show momentum, trend direction, and future areas of support and resistance. Created by Japanese journalist Boichi Hosoda in the 1960s, Ichimoku Clouds are composed of 5 lines of calculations, 2 of which form the “cloud.”

Impermanent Loss: As a feature of automated market making, impermanent loss represents the price risk that liquidity providers must manage in order to earn DEX trading fees for swaps of the liquidity pool's assets. Impermanent loss refers to the difference in token price between when you first deposited tokens into the pool, and any time thereafter, including when you withdraw.

Inventory Skew: The Inventory Skew lets you set and maintain a target inventory split between the base and quote assets. Available with Market Maker Plus, it prevents your portfolio balance from evolving towards one direction too much.

KYC/AML: Know Your Customer (KYC) and Anti-Money Laundering (AML) are a set of requirements that companies who deal with financial transactions must fulfill in order to remain compliant. KYC is the process of verifying the customer’s identity, and AML defines how companies report and track user transactions. Both are designed to prevent money laundering and other financial crimes.

Layer-1: Layer-1 refers to foundational blockchain networks that others can build cryptocurrency-based applications upon. Also known as protocols, Layer-1 blockchains include Bitcoin, Ethereum, Solana, and Binance Smart Chain.

Layer-2: Layer-2 refers to applications that are built on Layer-1 blockchains like Bitcoin and Ethereum. Examples of Layer-2s include the Lightning Network (built on Bitcoin), and Roll-ups (built on Ethereum), both of which are scaling solutions designed to make base Layer-1 transactions faster and less costly.

Level x Buy Amount: It is the amount of base currency per trade to buy at x RSI level

Liquidity: The liquidity is the ability to sell or buy any given asset without causing significant fluctuations in the market price for that asset.

Liquidity Providers: A liquidity provider is a trader on a decentralized exchange that stakes crypto tokens (LP tokens) in a smart contract in order to pool liquidity for the exchange’s crypto swaps. In return for staking their tokens, liquidity providers earn a portion of the exchange’s swap fees.

MACD: The Moving Average Convergence Divergence (MACD) is a momentum indicators. It is calculated by Traders use it find buy entries and sell exits.

  • MACD Fast Period: Specify the look-back period (number of bars) for fast moving average calculation. It is also called short term moving average.

  • MACD Signal Period: This is nine-day EMA of the MACD called the "signal line", it can function as a trigger for buy and sell signals

  • MACD Slow Period: Specify the look-back period (number of bars) for slow moving average calculation. It is also called long term moving average.

Maker: Also referred as Market Maker, a Maker is a firm or individual who places order on both sides of the order book, simultaneously.

Maker Fee: Exchanges tend to differenciate fees between Takers and Makers. The Maker Fee is often lower than the Taker Fee as an incentive for adding liquidity to the market pair.

Market: The pair (symbol) to trade. Quadency's standard convention is Base/Quote.

Market cap: Market cap is a way to measure the size of a cryptocurrency and is calculated by multiplying a coin’s price by its circulating supply.

Market Cycles: In crypto markets, there are four major market cycles that tend to play out repeatedly: Accumulation phase (sideways moving market), Markup (price rising quickly), Distribution (price is nearing the top), and Markdown (price is going down quickly).

Market Screeners: Market screeners for crypto are data tools that allow investors to use their own methodology regarding what makes a crypto asset valuable over the long run. It also helps them determine what technical indicators are pointing to a potential trading opportunity. Investors can set up filters and parameters to screen for thousands of assets at once to narrow down their trading and investment choices.

Mean Reversion: Mean reversion is a financial term for the assumption that an asset price will tend to move to the average price over time.

Meme Coin: A meme coin is a cryptocurrency token that does not have any business fundamentals behind it; it is simply a coin with no utility other than speculation and the power of the meme. Dogecoin (DOGE) and Shiba Inu (SHIB) are examples of meme coins.

Metaverse: The metaverse is the digital rendition of life that allows Internet users to connect, interact, play, shop, and work together through a digital experience.

Moving Average: Moving averages are calculated to identify the trend direction of a stock or to determine its support and resistance levels.

  • SMA: The Simple Moving Averages (SMA) place equal weight on price action.
  • EMA: The Exponential Moving Averages (EMA) place more weight on recent price action using a mathematical formula.
  • WMA: The Weighted Moving Average (WMA) assigns a greater weight to the most recent data, and less weight to the distant ones.

Number of Grids: Enter the number of grid lines to use. Generally higher is better if you have sufficient balance for good coverage of the trading range for the market being traded.

Non-Fungible Token (NFT): A non-fungible token is a type of token that is a unique digital asset and has no equal token unlike bitcoins which are interchangeable.

Order Replenish Delay: Time (in minutes) to wait before canceling unfilled orders once any order has been filled, and submitting a new set of orders.

Order Start Amount: The amount you wish to use for first buy and sell orders. In the example above, the order amount for first (innermost) buy and sell order will be 10.

Order Step Size: The amount to increment each consecutive order after the first one each side. In the example above, the second buy order size will be 12, the third 14 and so on. Same applies to the sell side.

Over Time Period: This is the length of time the bot will run. This time is also used to determine the number of orders the bot will send, spread evenly across this time period. In this example, the bot will run for 24 hours (or 1 day).

Order Types: When trading cryptocurrencies on an exchange there are often different types of orders available.

  • Market Order: A market order is a buy or sell order to be executed immediately at the current market prices. As long as there are buyers or sellers, the order will be filled.
  • Limit Order: A Limit Order allows traders to set the price at which they desire to buy or sell an asset. While the price is set in advance, this type of order doesn't guaranty that the order will be totally filled.
  • Stop Order: These are similar to Limit Orders, however when a certain price is reached, the order will become a market order and be filled at the next market price.
  • Trailing Stop Order: Unlike a Stop Order, where you set a price above or below the market price. With a trailing stop order, the stop is set as a percentage of the the market price.

Overbought: Overbought is a term used when an asset is believed to be trading at level currently above its value. It often implies a short-term correction of the market.

Oversold: This is the opposite of overbought. An oversold asset is thought to be traded below its value.

Proof of Attendance Protocol (POAP): A POAP is a unique, cryptographic record that commemorates an event or experience. POAPs are issued via a smart contract as an NFT and are given out by entities as a gift to fans, event attendees, collectors, or community members. POAPs also make the NFT experience more suitable for novices by reducing risk while exposing them to NFT technology.

Proof of History (PoH): Proof of History is a consensus mechanism created and utilized by the Solana (SOL) blockchain. PoH combines with Proof of Stake (PoS) to become a hybrid that ensures optimal blockchain speed using a cryptographic way of ordering transactions and events to be added to the blockchain.

Portfolio: In finance, a portfolio is a collection of financial investments: stocks, bonds, cryptocurrencies, etc.

Position Type: Choose whether to go long (buy) or short (sell). If long, you must have sufficient quote currency to place an initial buy order, and if short, you must have sufficient base currency to place an initial sell order.

Rebalancing: Rebalancing a portfolio is a strategy used by traders to re-distribute their asset allocation periodically over time.

Resistance: Resistance is a line indicator used in technical analysis to track historical price highs to find a level it is unable to break through, known as the “ceiling”. At this level of resistance, an upward trend tends to top out, signaling a reversal and possible sell signal. (See also “Support”.)

RSI: The Relative Strength Index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of an asset.

RSI Overbought Level: Level at which the bot will consider the asset overbought. At this level, a sell order will be triggered.

RSI Oversold Level: Level at which the bot will consider the asset oversold. At this level, it will trigger a buy order.

RSI Period: Enter the period (number of previous candles) to use for RSI calculations.

Satoshi (SATS): The smallest unit of bitcoin with a value of 0.00000001 BTC.

Short Squeeze:
A short squeeze occurs when investors have shorted an asset, betting that the price will go down. But instead, the asset's price unexpectedly spikes, leading to additional buy pressure. This series of events causes the short sellers to get "squeezed", forcing them to cover their short positions, also known as margin calls.

Slippage: Slippage refers to price changes between when a trade order is placed and when it is executed. An exchange's liquidity and latency contribute to slippage.

Smart Contract: A smart contract is a blockchain-based software that automates the enforcement of the conditions of a contract through code. Smart contracts are used extensively in digital asset markets such as with token sales, decentralized lending and borrowing, and DEX liquidity management.

Smart Suggest: Smart Suggest is powered by Quadency's proprietary Hyper-Parameter Optimization Engine - a technology that leverages a swarm of cloud servers to concurrently process thousands of backtests daily by trying different parameters combinations for each bot.

Soulbound Tokens (SBTs): Soulbound tokens are non-transferable (and non-tradeable) NFTs that create an Ethereum-based, onchain credential. Potential use cases include an onchain University degree or verifiable proof that you attended a professional training or conference.

Spot Market: In cryptocurrencies, a spot market is an exchange that enables traders to directly buy and sell crypto assets for immediate order fulfillment. Spot markets allow traders to buy and sell only with assets they own, and do not allow leverage or margin trading.

Stablecoin: A stablecoin is a type of cryptocurrency that attempts to peg its market value to another “stabler” reserve asset, such as a fiat currency or gold. By doing so, the stablecoin tries to offer crypto traders a higher level of price stability.

Starting Capital: The starting capital is the amount of quote currency to allocate to a bot for trading.

Staking: Traders can stake tokens that are then locked in a vault and run by a smart contract (i.e. providing liquidity with QUAD), or simply held in a crypto platform or wallet to earn crypto rewards (staking QUAD tokens).

Stop Loss Type: Indicate the type of stop-loss to use. "Fixed" is set as soon as the first order is made and calculated from the entry price. "Trailing" is adjusted in real-time as the market moves.

Stop Trigger: The value here determines when the bot should stop buying. The two options are Over Time Period and Total Amount to Spend.

Support: Support is a line indicator used in technical analysis. The support line is drawn as a trendline that follows price lows to find a level that it is unable to break through, otherwise known as the “floor”. At this level of support, a downward trend tends to bottom out, signaling a reversal and possible buy signal. (See also “Resistance”.)

Swap: A swap is an instant on-chain trade processed on Decentralized Exchanges.

Taker: The Taker is someone who decides to place an order on one side of the book only.

Target Base Percent: The proportion of base asset value to target.

Technical Analysis: Technical analysis is a form of trading analysis that analyses past prices to predict future price action. Traders use indicators such as RSI, MACD, Moving averages but also recognizable patterns.

Technical Indicators:
Technical indicators are pattern-based signals triggered by an asset's price, volume, or interest in futures. They are used by traders who use technical analysis to predict future price movements. Examples include Bollinger Bands and Relative Strength Index (RSI).

Trading Fee: Exchanges apply fee when any order is filled. Usually the apply a maker/taker fee schedule. As Makers add liquidity, maker fees tend to be lower than taker fees.

  • A maker fee is applied when you create an order which does NOT match any existing ask orders when buying or when you are selling matches any existing bid orders.

  • A taker fee is applied when you create an order which will match any existing ask orders when you are buying or when you are selling will match any existing bid orders.

Trailing Stop: A Trailing Stop order is a Stop order with a limit that trails after the market price by a distance. The limit is set in a currency or in percentage.

Two-factor authentication (2FA): is a second layer of security to help protect an account or system from unauthorized users.

Volatility: Volatility represents an asset's prices swing around the average price. The bigger the prices swing, the higher the volatility.

Volume: The Trading Volume is the total quantity of a single asset that was traded during a given period of time.

Whitelist: A Whitelist is a list of wallet addresses and/or KYC'd identities that are granted access to a certain system or protocol.

Yield Farming: Yield farming is any effort to put crypto assets to work and generate the most returns possible using different DeFi platforms.

YTD: Stands for year to date.