2.03 Common crypto trading terms

When you start to enter the crypto space, you are likely to see “unfamiliar” words or terms while reading articles or on social media. It may be intimidating to look at such crypto terms which are quite frequently used in different contexts. Some of them are technical terms and acronyms while others originated from slang words or phrases that are used extensively in the crypto community. 

Before learning various technical aspects like chart analysis, getting to know these trading terms is necessary for new traders. It also helps you to keep up with the latest news of the crypto market. 

This lesson is a compilation of the most commonly used crypto trading terms.

 

FOMO

FOMO stands for Fear Of Missing Out. It is used to describe the emotion of investors. 

Traders often feel fear of missing out on opportunities to make profits which results in buying an asset by a group of investors. Buying or selling an asset by a large group of people due to FOMO can lead to both bull and bear markets based on what the majority of people are doing with their assets. 

FUD

FUD stands for Fear, Uncertainty, and Doubt. It is generally used to describe the status of a financial market. 

FUD has become quite common in the cryptocurrency market. It is used as a strategy by some people known as FUDsters (non-believers of crypto) to discredit a particular company, product, or project. They spread misleading information to create uncertainty and fear in the market to gain an advantage, like making profits from short-selling. 

DYOR

DYOR stands for Do Your Own Research. It is generally used to advise investors to perform their own research instead of following other traders. 

As cryptocurrencies are highly volatile, it is risky to depend on the predictions, ideas, and opinions of other people. DYOR is widely used in the community to tell investors to research and make decisions on their own without depending on external advice. 

DD

DD stands for Due Diligence. DD is the investigation performed by a person or a business before committing to an agreement with another party.

The term DD is not only used in the crypto industry but also in various other scenarios. Businesses are required to perform DD before joining with other entities to avoid potential red flags. When crypto investors are exploring the market, they need to perform DD to take all the possible risks into consideration before investing. 

HODL

HODL stands for Hold On for Dear Life. It is a strategy of buying and holding the assets for a long time. 

It is highly possible for new traders to think that the term HODL is misspelled. Originally, the term appeared in a popular post named I AM HODLING on the Bitcoin talk forum in 2013. It was misspelled, but later investors used it as a strategy. Investors who hold on to their assets for a long period despite the dips are called HODLers. 

BUIDL

BUIDL is derived from the term HODL. It is used to describe the people who keep building the crypto and blockchain ecosystem irrespective of the price fluctuations. 

BUIDL is used to explain the mindset of people who aim to bring the technology to the masses and they don’t care about the market price changes. BUIDLers work towards their vision of changing the world with blockchain and cryptocurrency innovations with a long-term mindset. 

ROI

ROI stands for Return On Investment. It is used to measure the performance of an investment. 

ROI makes it easy to calculate how much profit or loss the investors made from their original investment. This way, we can easily compare the performances of different investments and make better decisions. 

ROI = Currency value - Original cost /Original cost

ATH

ATH stands for All-Time High value. It is used to talk about the all-time high value of an asset.  

The prices of assets keep on changing upwards or downwards. When an asset has crossed its previous high value, it is known to have reached a new ATH. Every investor who bought that asset at any point in time will be in profit during the ATH period. 

ATL

ATL stands for All Time Low.

This term is exactly the opposite of ATH. ATL is used to describe the all-time low value of an asset. When an asset reaches the lowest value, it will be hard to predict its behavior in the future as there will be no price history beyond ATL. Buying the asset during an ATL period might be risky. 

 AML

AML stands for Anti-Money Laundering. It refers to the rules and regulations in the financial industry that aim to eliminate potential frauds. 

AML rules prevent criminals from laundering their illegal money. Financial institutions like banks as well as regulated crypto exchange platforms monitor the transactions of their customers and report any small suspicious activity. AML procedures make it hard for criminals to disguise the true sources of their income. 

KYC

KYC stands for Know Your Customer. KYC guidelines make sure that financial institutions verify the identity of their customers. 

KYC guidelines are a part of the broader AML policy. Stock exchanges and trading platforms need to comply with the national and international KYC and AML rules to minimize the risk of money laundering and fraud. 

Whales

The term ‘whales’ is used to address individuals or entities that hold a large amount of an asset in the crypto industry. 

Bitcoin whales is a term that refers to holders having large amounts in the digital asset. Since it is not completely anonymous, we can see the addresses that hold a lot of Bitcoin. Whales have the ability to control the market prices as they hold a huge percentage of coins. 

Mooning/To the moon

‘Mooning’ or ‘to the moon’ is used to explain the rising price of a cryptocurrency. 

When the price of an asset is going upwards or increasing rapidly, we say that ‘it is mooning’ or ‘it is going to the moon.’ Some of the common phrases used in the community are “Bitcoin is going to the moon”, “prices are mooning”, etc.  

Pump and dump

The crypto term ‘pump and dump’ is a manipulation scheme in the industry. 

When scammers buy a cryptocurrency, they inflate the price of it artificially by spreading false information. Once the coin is bought by the masses, its price will be increased or pumped. Then the scammers will start selling or dumping the coin. This is known as the ‘pump and dump’ scheme. 

Lambo

Lambo is shorthand for Lamborghini, a luxurious Italian sports car. It became popular in the early days of crypto when investors used to write “When Lambo?”

The term emerged when few crypto investors afford a Lamborghini car by capitalizing on Bitcoin’s market movements. Traders use this term when they are excited to make huge profits from their crypto investments. 

Rekt

Rekt is internet slang for ‘wrecked' which means severely damaged or ruined. 

In the crypto community, the term rekt refers to someone who has lost a high sum of money due to a wrong trade. Additionally, rekt also refers to a digital asset that lost its value. 

Bagholder

Bagholders are the investors who hold large amounts of cryptocurrency despite the poor performance of the coin. 

Bagholders do not sell their assets even when the price decreases and becomes negligible. They believe that the asset performs well in the long term despite the immediate losses. As cryptocurrencies are going mainstream, this behavior has become quite common. 

With this lesson, we discussed common trading terms that aid you in understanding the market, following the news, and deciphering the actual meaning when the community refers to these phrases.