Cryptocurrency Trading Terms You Need to Know an Algorithmic Trader

Mon Apr 17 2023

Learn about some of the most common cryptocurrency terms that you are likely to encounter whether you trade manually or with the help of an algorithmic trading platform. Read more.

If you’re new to cryptocurrency trading, it can sometimes seem that the cryptocurrency trading world has a lexicon of it own. Understanding these terms can be useful in keeping up with what’s going on in the financial markets. In this article, we’ve compiled some of the most important trading terms you should know if you’re trading cryptocurrency.

Fear, Uncertainty, and Doubt (FUD)

FUD is a strategy that aims to discredit a particular company, product, or project by spreading misinformation about it. The aim is to instill fear and gain an advantage somehow. FUD is quite common in the cryptocurrency space, and investors may enter a short position in an asset then release potentially harmful or misleading news when the position has been established.

Fear Of Missing Out (FOMO)

FOMO is the emotion that investors feel when they flock to buy an asset in fear of missing out on the profit opportunity. As there are heavy emotions involved, FOMO by a large number of people can lead to parabolic price movements. Using an algorithmic trading platform like Æsir means you’re automatically less likely to FOMO with your strategy.

Algo Trading (Algorithmic Trading)

The act of entering and existing the market programmatically, using an algorithmic trading strategy. This strategy can be run on an algo trading platform such as Æsir, or separately on your own machine.

HODL

HODL is a term that’s derived from a misspelling of “hold.” It’s basically the cryptocurrency equivalent of the buy and hold strategy. HODL refers to holding on to investments despite price drops. It’s also commonly used in the context of investors (“HODLers”) who admittedly aren’t good at short-term trading, but want to get price exposure to cryptocurrency.

BUIDL

BUIDL is a derivative term of HODL. It usually describes participants of the cryptocurrency industry who continue to build regardless of price fluctuations. “BUIDLers” genuinely care about what blockchain and cryptocurrencies can bring to the world, and they are actively working towards this goal.

Return on Investment (ROI)

Return on Investment (ROI) is a way to measure an investment’s performance. ROI measures the returns of an investment relative to the original cost. It’s also a convenient way to compare the performance of different investments.

Reverse Cramer Indicator

A joke around the fact that the market usually does the opposite of what Financial Analyst Jim Cramer predicts. This has happened enough times historically that the Reverse Cramer Indicator was born, and it was only a matter of time until people started to create algorithmic trading strategies that do the opposite of what Jim Cramer Tweets.

All-Time High (ATH)

The All-Time High is the highest recorded price of an asset. Breaking an All-Time High is a compelling aspect of an asset reaching it, and almost everyone who ever bought is in profit. Despite the gains that almost everyone has made, ATH is the worst time trying to enter the market on a long position.

All-Time-Low (ATL)

The opposite of ATH, the All-Time Low (ATL), is the lowest price of an asset. Breaking an All-Time Low on an asset can lead to many stop orders triggering when the previous All-Time Low is breached, leading to a sharp move down. In contrast to ATH, this could be a great entry point, but it’s not without risk. It could be that the asset may never recover from this, especially if this is triggered by some news or event related to the asset itself.

Do Your Own Research (DYOR)

DYOR means that investors should do their own research into their investments and not rely on others to do it for them. “Don’t trust, verify” is a commonly used phrase in the cryptocurrency markets with similar meaning.

Due Diligence (DD)

Due diligence refers to the investigation and care that a rational person or a business is expected to make before coming to an agreement with another party.

Anti Money Laundering (AML)

Anti Money Laundering (AML) refers to a number of regulations, laws, and procedures that aim to prevent criminals from disguising their illegally obtained money as legitimate income.

Know Your Customer (KYC)

KYC guidelines ensure that institutions facilitating the trading of financial instruments.