Having A Good Grasp Over Crypto Terms Can Help You Become A Successful Trader
The crypto boom has transformed the global financial industry with opportunities for exponential growth, financial freedom, and seamless transactions. Since the launch of Bitcoin- the world’s largest cryptocurrency by volume- in 2009, the crypto market has witnessed a steady growth in adoption. More than 300 million people have already jumped on the crypto bandwagon and the number is expected to grow substantially in the coming years. But, are all the investors successful in growing their investment? Well, success in crypto depends upon education and investment strategies. Crypto’s rise is fuelled by the adoption of the technology called the blockchain. Thus, understanding the underlying technology, its use cases, and commonly used crypto terms is vital to long-term success.
If you have been in crypto for some time, you must have come across some new terms or slang that influencers or seasoned investors use frequently. Understanding the cryptocurrency terminology takes you one step closer to understanding the industry. Learning all the crypto terms at once could be tricky. But, if you are wondering how to become a successful crypto trader, learning these terms could be one of the many steps towards that success. Here are some of the useful crypto terms you must know to master your trading game.
- Altcoin: Any crypto token/coin other than Bitcoin is referred to as an altcoin. ‘Altcoin’ is a blanket crypto term used to describe all the cryptocurrencies other than Bitcoin. Ethereum, Monero, and Cardano are all examples of Altcoin. Ethereum is the largest altcoin by volume. There are thousands of altcoins in the crypto market and investors generally put their money in some of the top altcoins to maximize their gains in less time.
- FIAT: FIAT is another very commonly used crypto term that refers to any government-backed currency, for example, the US dollar, Euro, Indian Rupee, Kuwaiti Dinar, etc. As an investor, you will need to add some FIAT on the crypto exchange of your choice to start investing in your favorite crypto.
- Private Key: Private Key is one of the most important crypto terms for an investor. It is the equivalent of a transaction password in banking. It is an extremely important alphanumeric string necessary for verifying crypto transactions. For trading securely, it is important that you never share your private key with anyone.
- FOMO: FOMO stands for fear of missing out. FOMO is used to refer to the feeling when an investor feels the urgency to hop on a trade just because others are buying the token or the price is rising. However, a good investor should always avoid FOMO. You must plan your trades and have a tight watch on the highs and lows before putting in your money. Remember, there’s always the next chance in crypto trading.
- FUD: Fud stands for Fear, uncertainty, and doubt. Fud is a condition fabricated by the big influencers to influence the perception of investors on a large scale through false or misleading information. A good investor is one who can differentiate authentic information from misleading information and steer clear of FUD. Your investment decisions must be entirely yours.
- HODL: HODL is an extremely important crypto term for those in crypto solely for generating passive income. In fact, it is an investment strategy that means “Hold On For Dear Life”. HODL means remaining invested in a crypto token regardless of the temporary changes in the market condition. Long-term investors use the word to convey that they have invested in a coin for the long term.
- Sats: Sats is a crypto term used to describe a fractional unit of Bitcoin. Derived from Satoshi Nakamoto, the term used to describe the individual or the group behind the creation of Bitcoin, Satoshi is the 100 millionth part of a bitcoin. Sats are generally used while trading a crypto token against bitcoin instead of a FIAT.
- CMP: CMP stands for “Current Market Price”. The term is frequently used during the technical analysis or financial analysis of a token. As the name suggests, CMP is used to describe the market price of a crypto token at a time.
- Rally: A rally is an event when the price of certain crypto token witnesses a substantial spike over a short period of time. The term is also used to describe the market condition in the case of a major pump. This is the period when investors can maximize their gains. A rally indicates a massive buying of a cryptocurrency.
- Dump: A dump is an exact opposite of a rally. A dump indicates a sudden and substantial sell-off of crypto tokens. The prices of crypto tokens can fall drastically during a dump. You must always have a stoploss across your trades to protect your funds from a dump.
- Stoploss: Stoploss is the lowest price at which an investor is ready to sell their crypto assets in case of a dump. The crypto market is extremely volatile and you must have a stoploss in place to protect your capital in case of a dump.
- Support: Support is a price level on a crypto chart where the price of a crypto token is accumulating for a significant amount of time during a downtrend. Support is the price level where the price tends to bounce back as the level prevents it from falling further. A support zone is an ideal entry for investors.
- Resistance: Resistance is a price level in the uptrend at which, a lot of investors tend to sell a crypto token to book profit. It acts as a hurdle for a token in touching a higher price range. Resistance zones can be easily spotted by looking at the sell volumes at different price levels on the chart.
- Rekt: Rekt is another commonly used crypto term that is used to describe a major loss in a trade. Getting rekt could mean an investor losing a major part of or the entire portfolio due to a failed trade.