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.
- Learn more: What is an airdrop?, How to farm airdrops
- Also see: Tokenomics
AMM (Automated Market Maker)
A decentralized trading model that uses algorithms and liquidity pools instead of order books to enable asset swaps.
- Learn more: What are market makers?
- Also see: DEX/CEX
Arbitrage
A strategy where traders capitalize on price differences for the same asset across different markets or platforms.
- Learn more: Swap and Exchange Crypto: Five Things to Know Before You Swap
- Also see: Ask/Bid
Ask / Bid
Ask: The lowest price a seller is willing to accept.
Bid: The highest price a buyer is willing to pay.
- Also see: Order Book
Bear Market / Bull Market
Bear Market: A prolonged period of falling prices.
Bull Market: A period of sustained upward price movement.
Borrowing / Lending
Borrowing: Locking up assets as collateral to receive another asset you can use for trading, staking, or liquidity needs.
Lending: Supplying assets to a protocol or platform so others can borrow them, earning yield in return.
- Learn more: What is DeFi? Lend, Borrow and Put Your Crypto to Work
- Also see: Collateral
Buyback
When a company or protocol repurchases its own shares or tokens from the market, reducing supply and potentially increasing value for remaining holders.
- Also see: Stock Split, Circulating Supply
Candlestick
A charting method showing an asset’s open, close, high, and low price during a specific time period.
- Also see: Volume, Volatility
Circulating Supply
The number of tokens currently available and actively trading in the market.
- Learn more: What is Market Cap?
- Also see: Total Supply, Max Supply, Market Cap
Clearinghouse
An intermediary that ensures trades are processed, matched, and settled correctly, reducing counterparty risk between buyers and sellers.
- Also see: DEX/CEX, Settlements
Collateral
Assets pledged to secure a loan or position; used in both margin trading and lending protocols.
- Also see: Margin, Borrow/Lending
DEX / CEX
DEX (Decentralized Exchange): Peer-to-peer trading without intermediaries.
CEX (Centralized Exchange): A traditional exchange run by a company or intermediary.
- Learn more: What is the difference between MEW and an Exchange
- Also see: Liquidity, Spot Trading
Derivatives
Financial instruments whose value is based on an underlying asset — examples include futures, options, and perpetual swaps.
- Also see: Position, Impermanent Loss
Dividends
Regular payments made to shareholders or tokenholders, typically from company profits or protocol revenue distribution.
- Also see: Earnings per Share, Incentives
Earnings Per Share / Token (EPS)
A profitability metric showing how much profit is earned for each share or token in circulation, used to measure performance and valuation.
- Also see: Derivatives, Expense Ratio
ETF (Exchange-Traded Fund)
A basket of assets—such as stocks, bonds, or crypto exposure—that trades on an exchange like a single asset, offering diversified investment in one product.
- Also see: Derivatives, Expense Ratio
Expense Ratio
The annual fee charged by a fund or ETF, expressed as a percentage of total assets, covering management and operational costs.
- Also see: Gas Fees, ETF
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.
- Also see: Circulating Supply, Total Supply, Max Supply, TVL (Total Value Locked)
FOMO / FUD
FOMO: Fear of Missing Out — emotional buying pressure.
FUD: Fear, Uncertainty, and Doubt — negative sentiment that can move markets.
Fractional Shares
Portions of a full share, allowing investors to buy less than one whole share when full shares are too expensive or to invest precise amounts.
- Also see: Dividends, Expense Ratio
Gas Fees
Transaction fees paid on blockchain networks to process operations, varying based on network demand and type of transaction.
- Learn more: What is Gas?
ICO (Initial Coin Offering)
A token-based fundraising event where crypto projects sell newly issued tokens to early supporters before launch.
- Also see: Tokenomics, IPO (Initial Public Offering)
Impermanent Loss
The difference in value between holding tokens in a liquidity pool versus holding them in a wallet, caused by price movements.
- Learn more: Liquidity in Crypto: How to Use Liquidity Pools
- Also see: Liquidity, Liquidity Pools
Incentives
Rewards offered by a protocol or platform—such as tokens, discounts, or boosted yields—to encourage user participation or liquidity provision.
- Learn more: What is an airdrop?, How to farm airdrops
- Also see: Tokenomics
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.
- Also see: ICO (Initial Coin Offering)
Leverage
Borrowed capital used to amplify the size of a trading position. It increases both potential gains and potential losses.
- Learn more: What are Perpetual Futures?
- Also see: Margin
Limit Order / Market Order
Limit Order: Buy or sell at a specific price.
Market Order: Buy or sell immediately at the current market price.
- Learn more: Liquidity in Crypto: How to Use Liquidity Pools
- Also see: Order Book
Liquidity
The ease with which an asset can be traded without impacting its price. Higher liquidity generally means smoother, more stable trading.
- Learn more: Liquidity in Crypto: How to Use Liquidity Pools
- Also see: Liquidity Pool
Liquidity Pool
A pool of user-supplied assets that powers decentralized trading, lending, or yield-generating activities.
- Learn more: Understanding Liquidity Pools: Rewards and Risks Involved
- Also see: Yield, Impermanent Loss
Margin
The collateral required to open a leveraged position on an exchange. Margin trading allows traders to borrow funds to increase the size of their position, amplifying both potential gains and losses. A margin call occurs when the collateral value drops too low and the trader must add more funds or risk having their position liquidated.
- Learn more: What are Perpetual Futures?
- Also see: Leverage, Collateral, Position
Market Cap
The total value of an asset, calculated as price multiplied by circulating supply.
- Learn more: What is Market Cap?
- Also see: Circulating Supply, Total Supply, Max Supply, TVL (Total Value Locked)
Max Supply
The absolute maximum number of tokens that can ever exist for a given asset, as defined by its code or monetary policy.
- Also see: Total Supply
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.
- Also see: Volume
Order Book
A list of buy and sell orders for an asset, showing the visible supply and demand on centralized exchanges.
- Also see: Bid/Ask
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).
- Also see: Leverage, Margin
Price-to-Earnings (P/E) Ratio
A valuation metric comparing an asset’s price to its earnings per share, used to assess whether it’s undervalued or overvalued.
- Also see: Expense Ratio
Reverse Stock Split
The opposite of a stock split — combining multiple shares into one to increase the price per share while keeping the total value unchanged.
- Also see: Stock Split, Dividends
Settlement
The final step in a trade where assets and funds are officially exchanged and ownership is transferred.
Also see: Clearinghouse
Slippage
The difference between the expected price and the executed price of a trade — often due to volatility or low liquidity.
- Learn more: Swap and Exchange Crypto
- Also see: Liquidity
Spot Trading
Buying or selling an asset for immediate settlement, as opposed to futures or options.
- Learn more: What are market makers?
- Also see: DEX/CEX
Stablecoin
A crypto asset designed to maintain a stable value, typically pegged to a fiat currency like USD.
- Learn more: What are Stablecoins?
Staking
Locking up tokens to help secure a network or support protocol operations in exchange for rewards.
- Learn more: What is Staking?
- Also see: Tokenomics
Stock Split
A corporate action that increases the number of shares while proportionally reducing the price per share, making the stock more affordable without changing total value.
- Also see: Reverse Stock Split, Buyback
Tokenomics
The economic design of a token — supply, distribution, utility, and incentives.
- Also see: Total Supply, Incentives, Vesting
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.
- Also see: TVL (Total Value Locked)
TVL (Total Value Locked)
The total amount of assets deposited into a protocol. Often used to measure trust and activity in DeFi platforms.
- Learn more: What is TVL?
- Also see: Staking, Total Supply
Vesting
A schedule that gradually releases tokens over time, preventing instant selling and aligning long-term incentives.
- Also see: Tokenomics, Total Supply
Volatility
The degree of price fluctuation over time. High volatility means larger price swings; low volatility means more stability.
- Also see: Candlestick, Moving Average
Volume
The total amount of an asset traded within a specific time period, indicating activity and market interest.
- Also see: Market Cap, Moving Average
Whale
A market participant holding a large amount of an asset, capable of influencing price or liquidity with a single trade.
- Also see: Volatility, FOMO/FUD
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.
- Learn more: Stablecoin Yield Strategies: Earning Yield with Stability
- Also see: Incentives, Staking
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!
