Every term used across this section, defined once and in plain words. Most of the jargon is ordinary ideas wearing a costume.

Kept in one place so nothing in this section has to stop and explain itself twice. Grouped by subject rather than alphabetically, because the terms make more sense next to their relatives.

The market

Spot — buying the asset itself. It becomes yours and can be withdrawn.

Pair — what is being traded against what. BTC/USDT means bitcoin priced in that stablecoin.

Base and quote — in a pair, the base is what you are buying; the quote is what you are paying with.

Order book — the list of all resting buy and sell orders, sorted by price.

Bid — the highest price anyone is currently willing to pay. Ask (or offer) — the lowest price anyone will currently accept.

Spread — the gap between them. A cost you pay by crossing it.

Depth — how much size is waiting at each price. Determines what a large order does to the price.

Liquidity — how easily something can be traded without moving the price. High liquidity means deep books and small spreads.

Slippage — the difference between the price you expected and the average you received.

Volume — how much traded in a period. Open interest — how much is currently open in contracts, which is a different measurement.

Maker — an order that rests in the book, adding liquidity. Taker — one that executes immediately against it, removing liquidity. Takers usually pay more.

Volatility — how much the price moves, in either direction. Not a synonym for falling.

Orders

Market order — execute now at whatever price is available. Certain execution, uncertain price.

Limit order — execute only at this price or better. Certain price, uncertain execution.

Stop-loss — an instruction that becomes a market order when a price is touched. Caps the intention, not the loss.

Stop-limit — the same trigger, placing a limit order instead. Avoids a terrible fill, risks no fill.

Take-profit — a resting order that closes a position at a favourable price.

Trailing stop — a stop that follows the price at a fixed distance and never moves back.

OCO — one cancels the other. Two orders where filling one removes the other, usually a take-profit paired with a stop.

GTC, IOC, FOK — good till cancelled, immediate or cancel, fill or kill. How long the order is allowed to live.

Post only — reject the order if it would execute immediately, guaranteeing the maker fee.

Reduce only — this order may only shrink a position, never open one in the other direction.

Positions

Long — a position that gains when the price rises. Short — one that gains when it falls.

Entry and exit — the prices at which a position was opened and closed.

Unrealised profit or loss — the paper result of an open position. Realised — what remains once it is closed and the costs are paid.

Drawdown — the fall from a peak to a trough in the value of an account. The number that decides what has to be recovered.

Position size — the value of what you are holding, which decides what being wrong costs.

Risk-reward — the size of the intended gain compared with the loss accepted if the stop is hit.

Derivatives

Derivative — a contract whose value derives from a price, without ownership of the thing itself.

Futures — an agreement about a price with a settlement date. Perpetual — the same without a date, held to the price by funding.

Leverage — holding a position larger than your collateral. Expressed as a multiple.

Margin — the collateral supporting the position. Initial margin opens it; maintenance margin is the minimum that keeps it open.

Isolated margin — collateral tied to one position. Cross margin — the whole balance supporting everything.

Liquidation — the platform closing the position because the collateral fell below the maintenance level.

Funding rate — the periodic payment between longs and shorts that keeps a perpetual near the spot price.

Mark price — a reference price derived from spot markets, used for liquidation and unrealised results instead of the last trade.

Insurance fund — the venue's reserve covering shortfalls when a liquidation fills worse than the collateral available.

Auto-deleveraging — closing profitable traders on the opposite side when the insurance fund cannot cover a shortfall.

Basis — the difference between the contract price and the spot price.

Things that happen to the market

Liquidation cascade — forced closes triggering further forced closes, because each one trades in the direction that triggers the next.

Short squeeze — a rise that forces shorts to buy, pushing the price higher and forcing more of them.

Wick — a brief extreme on a candle that did not hold. Flash crash — a violent move that reverses quickly, usually a thin book meeting a large order.

Arbitrage — profiting from the same asset trading at different prices in different places.

Wash trading — trading against yourself to manufacture the appearance of volume.

MEV — value extracted by whoever controls the order of transactions in a block. On-chain, this is where sandwich attacks come from.

The slang

Worth recognising, mostly not worth using.

HODL — holding regardless of price, from an old misspelling. Bagholder — someone left holding an asset that collapsed.

FOMO — buying because a move is happening without you. FUD — negative information, though the term is used to dismiss accurate criticism as often as false claims.

Ape in — entering large and quickly without checking. Rekt — heavily lost, usually via liquidation.

Whale — a holder large enough that their actions move the price. Paper hands and diamond hands — selling early or refusing to sell, both used as social pressure rather than description.

Exit liquidity — the buyers somebody else needs in order to sell. The phrase is worth remembering, because at the wrong moment it describes you.