Whether you're navigating traditional finance or the fast-moving world of decentralized finance, you’ll encounter a shared language of trading terms. Understanding these fundamentals helps you read markets, interpret strategies, and make more confident decisions — no matter which ecosystem you operate in. Below is a concise glossary designed to clarify the most common terms without overwhelming you with technical detail.
Disclaimer: The information provided in this article is for educational and informational purposes only and should not be considered financial, investment, or trading advice. Always do your own research and consult with a qualified financial advisor before making any investment decisions. Cryptocurrency markets are highly volatile and carry significant risk.
Why These Matter
- Knowing these terms lets you read markets smarter, whether you're on Uniswap or NYSE.
- They help you communicate clearly with other traders, developers, or users.
- Understanding concepts like Vesting or Tokenomics gives insight into a project's long-term incentives — not just short-term hype.
- Being fluent in risk-related terms (leverage, impermanent loss, slippage) helps you protect yourself from common pitfalls.
Airdrop
A distribution of tokens to users, often as a reward for participation or early adoption in a protocol or platform.
AMM (Automated Market Maker)
A decentralized trading model that uses algorithms and liquidity pools instead of order books to enable asset swaps.
Arbitrage
A strategy where traders capitalize on price differences for the same asset across different markets or platforms.
Ask / Bid
- Ask: The lowest price a seller is willing to accept.
- Bid: The highest price a buyer is willing to pay.
Bear Market / Bull Market
- Bear Market: A prolonged period of falling prices.
- Bull Market: A period of sustained upward price movement.
Borrowing & Lending
Protocols or platforms that allow users to lock up assets as collateral to borrow other assets or earn yield by supplying liquidity.
Candlestick
A charting method showing an asset’s open, close, high, and low price during a specific time period.
Circulating Supply
The number of tokens currently available and actively trading in the market.
Collateral
Assets pledged to secure a loan or position; used in both margin trading and lending protocols.
DEX / CEX
- DEX (Decentralized Exchange): Peer-to-peer trading without intermediaries.
- CEX (Centralized Exchange): A traditional exchange run by a company or intermediary.
Derivatives
Financial instruments whose value is based on an underlying asset — examples include futures, options, and perpetual swaps.
FDV (Fully Diluted Valuation)
The projected market value of a token if all possible tokens—circulating, locked, vested, or reserved—were released into the market.
FOMO / FUD
- FOMO: Fear of Missing Out — emotional buying pressure.
- FUD: Fear, Uncertainty, and Doubt — negative sentiment that can move markets.
Gas Fees
Transaction fees paid on blockchain networks to process operations, varying based on network demand.
ICO (Initial Coin Offering)
A token-based fundraising event where crypto projects sell newly issued tokens to early supporters before launch.
Impermanent Loss
The difference in value between holding tokens in a liquidity pool versus holding them in a wallet, caused by price movements.
Incentives
Rewards offered by a protocol or platform—such as tokens, discounts, or boosted yields—to encourage user participation or liquidity provision.
IPO (Initial Public Offering)
A traditional finance event where a private company offers its shares to the public for the first time on a stock exchange.
Leverage
Borrowed capital used to amplify the size of a trading position. It increases both potential gains and potential losses.
Limit Order / Market Order
- Limit Order: Buy or sell at a specific price.
- Market Order: Buy or sell immediately at the current market price.
Liquidity
The ease with which an asset can be traded without impacting its price. Higher liquidity generally means smoother, more stable trading.
Liquidity Pool
A pool of user-supplied assets that powers decentralized trading, lending, or yield-generating activities.
Margin
The collateral required to open a leveraged position on an exchange.
Market Cap
The total value of an asset, calculated as price multiplied by circulating supply.
Max Supply
The absolute maximum number of tokens that can ever exist for a given asset, as defined by its code or monetary policy.
Moving Average
A trend indicator that smooths out price data by calculating the average price of an asset over a specific time period, helping traders identify momentum and direction.
Order Book
A list of buy and sell orders for an asset, showing the visible supply and demand on centralized exchanges.
Position
An active trade or investment that represents your exposure to an asset — either long (benefiting from price increases) or short (benefiting from price decreases).
Slippage
The difference between the expected price and the executed price of a trade — often due to volatility or low liquidity.
Spot Trading
Buying or selling an asset for immediate settlement, as opposed to futures or options.
Stablecoin
A crypto asset designed to maintain a stable value, typically pegged to a fiat currency like USD.
Staking
Locking up tokens to help secure a network or support protocol operations in exchange for rewards.
Tokenomics
The economic design of a token — supply, distribution, utility, and incentives.
Total Supply
The number of tokens that exist right now, including those circulating and those locked or reserved, but excluding any tokens that may be burned in the future.
TVL (Total Value Locked)
The total amount of assets deposited into a protocol. Often used to measure trust and activity in DeFi platforms.
Vesting
A schedule that gradually releases tokens over time, preventing instant selling and aligning long-term incentives.
Volatility
The degree of price fluctuation over time. High volatility means larger price swings; low volatility means more stability.
Volume
The total amount of an asset traded within a specific time period, indicating activity and market interest.
Whale
A market participant holding a large amount of an asset, capable of influencing price or liquidity with a single trade.
Yield
The return earned from holding, staking, lending, or providing liquidity for an asset. In both TradFi and DeFi, yield reflects the percentage of profit generated over time, often expressed as APR or APY.
Thank you for checking out our Trading Terms Glossary! Don't forget to download Enkrypt for a seamless web3 multichain wallet experience. We would love to hear from you on our social media about any guide suggestions you have for the future. Also, if you enjoy using mobile cryptocurrency wallets, give our MEW Mobile app a try, it's available on both iOS and Android platforms!
