Crypto Trading Glossary
One-sentence definition plus a short plain-English expansion for every term. Where it helps, entries link to the matching calculator or full guide.
Spot trading
Buying or selling the actual asset for immediate settlement at the current market price.
In spot trading you own the coins you buy — there is no leverage, no liquidation and no funding fee. It is the baseline against which every derivative product is measured, and where most beginners should start. Go deeper →
Leverage
Using borrowed funds so a small amount of capital controls a larger position.
At 10x leverage, $100 of margin controls a $1,000 position: both gains and losses are amplified tenfold. Leverage does not change what the market does — it changes how much of an adverse move your position can survive. Go deeper →
Margin
The collateral you post to open and maintain a leveraged position.
Margin is not a fee — it is your own capital locked as a guarantee. Initial margin opens the position; maintenance margin is the minimum below which the exchange force-closes it. Go deeper →
Isolated vs cross margin
Two margin modes: isolated risks only the margin assigned to one position; cross shares your whole account balance.
Isolated margin caps the damage of one bad trade at that trade’s margin. Cross margin uses the entire available balance to defend every open position — it liquidates later, but one runaway loss can take the whole account with it.
Liquidation
The forced closing of a leveraged position when margin falls below the maintenance requirement.
For an isolated long, liquidation price is roughly entry × (1 − 1/leverage + maintenance margin rate). Exchanges trigger on mark price, not last price, so the real trigger usually arrives slightly before your own estimate. Go deeper →
Maintenance margin rate (MMR)
The minimum equity ratio a position must keep to stay open, typically 0.4%–1%.
MMR rises in tiers as position size grows, which is why very large positions liquidate earlier than the simple formula suggests. It is the buffer the exchange keeps to close you out before your loss becomes its loss. Go deeper →
Perpetual contract
A futures contract with no expiry date, kept near the spot price by funding payments.
Perpetuals are the most traded crypto derivative. Because they never settle, exchanges use a funding rate exchanged between longs and shorts to pull the contract price back toward spot. Go deeper →
Funding rate
A periodic payment between longs and shorts (usually every 8 hours) that anchors a perpetual to spot.
Positive funding means longs pay shorts; negative means the reverse. It is charged on full position value, so leverage multiplies funding cost exactly as it multiplies price moves — a quiet drain on positions held for days. Go deeper →
Maker / taker fees
Taker orders execute immediately and pay more; maker orders rest on the book and pay less.
Market orders are almost always taker. The gap matters at scale: a 0.06% taker fee at 20x leverage consumes 1.2% of posted margin per side. Fee tiers, token discounts and promos all move these numbers. Go deeper →
Order book
The live list of buy (bid) and ask (sell) orders waiting at each price level.
Depth on both sides of the book determines how much you can trade without moving the price. Thin books mean wider spreads and worse slippage — a core reason liquidity separates good exchanges from bad ones. Go deeper →
Market order / limit order
A market order executes now at the best available price; a limit order waits for your specified price.
Market orders guarantee execution but not price; limit orders guarantee price but not execution. In fast markets a market order can fill noticeably worse than the last quoted price — that difference is slippage.
Stop-loss / take-profit
Pre-set orders that close a position automatically at a chosen loss or profit level.
A stop-loss converts an open-ended risk into a defined one, which is what makes position sizing possible at all. Professionals size the position from the stop distance first, then choose leverage. Go deeper →
Position sizing
Deciding how large a trade to open from account balance, risk percentage and stop distance.
Position value = (balance × risk %) ÷ distance to stop. Risking 0.5%–2% per trade is the standard professional range: at 1% it takes roughly 100 consecutive losses to zero an account. Go deeper →
Slippage
The difference between the price you expected and the price your order actually filled at.
Slippage grows with order size, volatility and thin order books. It is an invisible fee: on illiquid pairs it routinely costs more than the exchange’s stated trading fee. Go deeper →
Long / short
A long profits when price rises; a short profits when price falls.
Derivatives let you take either side. Shorts carry an extra structural risk: losses are theoretically unlimited as price can rise without bound, which is why liquidation discipline matters even more on the short side.
Copy trading
Automatically mirroring the trades of a chosen trader with your own funds.
Your results depend on the trader’s risk profile, not just their headline return — a high-return copy target running 50x leverage transfers that liquidation risk to you. Check drawdown history before allocation. Go deeper →
Grid bot
An automated strategy that places a ladder of buy and sell orders across a price range.
Grid bots harvest volatility inside a sideways range and lose money in strong trends that exit the range. The grid’s boundaries and per-grid size are risk decisions, not settings to leave on defaults. Go deeper →
KYC (Know Your Customer)
Identity verification an exchange requires before granting full account features.
Exchanges differ widely: some allow trading and limited withdrawals with no KYC, others gate everything behind verification. The real comparison points are withdrawal limits per tier and which features stay locked. Go deeper →
CEX / DEX
A centralized exchange holds your funds and runs the order book; a decentralized exchange settles trades on-chain from your own wallet.
CEXs offer deeper liquidity, fiat rails and leverage, at the cost of custody risk. DEXs remove the custodian but add smart-contract risk, gas costs and thinner books. Go deeper →
Stablecoin
A token designed to hold a fixed value, usually pegged 1:1 to the US dollar.
USDT and USDC dominate crypto trading pairs and margin collateral. The key questions are what backs the peg and how redemptions work — history shows pegs can break exactly when markets are most stressed.
Proof of reserves
A published attestation that an exchange actually holds the assets its users deposited.
Post-FTX, reserve publication became a baseline trust signal. It is necessary but not sufficient — reserves without disclosed liabilities can still hide insolvency, so look for both sides of the ledger. Go deeper →
Cold wallet
Crypto storage kept offline, out of reach of remote attackers.
Exchanges keep the bulk of user funds in cold storage and a working float in hot wallets. For individuals, moving long-term holdings off-exchange to a hardware wallet removes custodial risk entirely.
APR / APY
APR is the simple annual rate; APY includes compounding.
The same product looks better quoted in APY than APR, which is exactly why marketing prefers APY. Convert to one basis before comparing yields across platforms. Go deeper →
DCA (dollar-cost averaging)
Investing a fixed amount on a fixed schedule regardless of price.
DCA trades away timing risk in exchange for average entry prices. It is the one strategy that requires no forecast — which is why it survives market regimes that break most active strategies. Go deeper →
Spot vs futures
Spot buys the asset now; futures trades a contract on future price without necessarily holding the coin.
Spot settles immediately and leaves you holding the asset. Futures (including perpetuals) settle P&L against a contract price and usually allow leverage, funding, and liquidation. Same market view, very different risk plumbing.
Open interest
The total size of outstanding futures or perpetual contracts that have not been closed.
Rising open interest with price can mean new capital is entering the move; falling open interest can mean positions are being closed rather than new bets stacked. It measures how crowded a contract is, not who is right.
Mark price
The fair-value price an exchange uses to calculate unrealized P&L and trigger liquidations.
Mark price is usually a blend of the contract mid and a spot index, designed to resist a single thin book last-trade spike. Liquidations fire on mark, not last price, so the screen last can look safe while mark has already crossed the line.
Unrealized P&L
Paper profit or loss on an open position before you close it.
Unrealized P&L moves with mark price and only becomes realized when you close, get liquidated, or otherwise settle. Funding and fees still hit the account while the P&L is only on paper, which is why a green unrealized number can coexist with shrinking equity.
Wallet balance
The funds credited to your exchange account before margin locks and unrealized P&L adjustments.
Interfaces often split wallet balance, available balance, and equity. Available is what you can still allocate or withdraw; equity folds in unrealized P&L. Reading the wrong line is a common reason people think they have more free capital than the risk engine will allow.
Taker fee
The fee charged when your order removes liquidity by filling against resting orders immediately.
Market orders and aggressive limits that cross the spread are typically taker. Because the fee is on notional, leverage multiplies its bite on posted margin even when the percentage looks tiny on the fee schedule. Go deeper →
Maker fee
The fee charged when your order adds liquidity by resting on the book until someone else hits it.
Passive limit orders that do not cross the spread are usually maker and price better than taker. Maker is not free alpha: you trade fill certainty for a lower rate, and in fast markets unfilled makers miss the move you wanted. Go deeper →
VIP fee tier
A volume-based schedule that lowers maker and taker rates as your recent trading volume rises.
Tiers usually look back over recent notional volume and may add token-holding discounts. The headline VIP rate only helps if your real mix of maker vs taker and your hold time still leave net edge after funding and slippage. Go deeper →