Crypto exchange & trading glossary

A fiat on-ramp is the payment method — bank transfer, card, or a third-party processor — that lets you convert regular currency into crypto on an exchange.

KYC is the identity-verification process exchanges run before letting you trade, deposit, or withdraw past certain limits, required to comply with anti-money-laundering law.

Market cap is circulating supply multiplied by current price; it estimates a cryptocurrency's total value, not the amount of cash that has actually flowed into it.

An order book is the live list of buy orders (bids) and sell orders (asks) for a trading pair, ranked by price, showing exactly what the market is willing to trade at right now.

Proof of reserves (PoR) is a cryptographic or audited attestation showing an exchange holds enough assets on-chain to cover customer balances, so it isn't lending out deposits it can't return.

Spot trading means buying or selling crypto for immediate settlement at the current market price — you own the asset outright as soon as the trade fills.

Trading volume is the total value of an asset bought and sold over a given period (usually 24 hours), used to gauge how easily you can enter or exit a position.

Volatility measures how much and how fast an asset's price swings over a given period; higher volatility means larger potential gains and losses in the same window.

Dollar-cost averaging means investing a fixed amount at regular intervals regardless of price, which averages your entry price over time instead of trying to time a single entry.

A limit order sets the exact price you're willing to buy or sell at; it only fills at that price or better, but there's no guarantee it fills at all.

Liquidity is how easily an asset can be bought or sold near its current price without moving that price significantly; deep order books and high volume both signal high liquidity.

A market order buys or sells immediately at the best available price on the order book, prioritizing speed of execution over price control.

RSI is a 0-100 momentum indicator that compares the size of recent gains to recent losses to show whether buying or selling pressure is currently dominant on a chart.

Slippage is the difference between the price you expected and the price you actually got filled at, usually because the order book didn't have enough depth at that price.

The spread is the gap between the best bid (highest buy order) and best ask (lowest sell order) on an order book — an implicit trading cost that exists even before fees.

A stop-loss is a pre-set order that automatically closes a position once price hits a chosen level, capping how much you can lose on a trade.

A take-profit order automatically closes a position once price reaches a target level, locking in gains without requiring you to watch the chart.

A timeframe is the period each candle on a chart represents (like 1 hour, 4 hours, or 1 day) — switching timeframes changes which trend, and which noise, you're actually looking at.

A trending market moves persistently in one direction across multiple timeframes; a sideways (ranging) market oscillates between a support and resistance level without either side clearly winning.

A maker fee is charged when your order adds liquidity to the order book — like a limit order that doesn't fill immediately — instead of matching an order that's already there.

A taker fee is charged when your order removes liquidity from the order book by matching immediately against an existing order, like a market order does.

A withdrawal fee is a flat or asset-specific charge an exchange deducts when you move crypto off the platform to an external wallet — separate from any blockchain network fee.

Drawdown is the percentage decline from a portfolio's peak value to its lowest point afterward — a measure of how much value was lost before any recovery.

Position sizing (also called risk per trade) is deciding how much capital to put into a single trade based on the distance to your stop-loss and how much of your account you're willing to risk — not on conviction alone.

The risk-reward ratio compares how much you stand to lose if your stop-loss is hit versus how much you stand to gain if your take-profit is hit, on the same trade.

The funding rate is a periodic payment exchanged between long and short traders on a perpetual futures contract, used to keep the contract's price close to the underlying spot price.

Leverage lets you open a position larger than your actual capital by borrowing the difference from the exchange, multiplying both potential gains and potential losses.

Liquidation is when an exchange forcibly closes a leveraged position because losses have eaten through the margin, done to prevent the account from going negative.

Margin is the collateral you deposit and lock up to open and maintain a leveraged position — it's returned (minus any losses) when the position is closed.

Perpetual futures (perps) are derivative contracts that track an asset's price with no expiry date, using a funding rate mechanism to keep the contract's price anchored to the spot price.

A cold wallet stores your private keys on a device that stays offline, like a hardware wallet, making it far harder for a remote attacker to reach than a wallet connected to the internet.

A hot wallet is a crypto wallet connected to the internet — a browser extension, mobile app, or exchange account — convenient for frequent transactions but more exposed to online attacks than a cold wallet.

A seed phrase (recovery phrase) is a sequence of 12-24 words that encodes a wallet's private keys, letting you restore full access to your funds on any compatible wallet if your device is lost.

Self-custody means holding your crypto in a wallet where you — not an exchange or third party — control the private keys, making you solely responsible for keeping it safe.

A stablecoin is a cryptocurrency designed to hold a steady value, usually pegged 1:1 to a fiat currency like the US dollar, backed by reserves or an algorithmic mechanism.