Below we will analyze the key concepts and explain where people most often get confused.
Key terms for traders and investors
1. Long 🚀
Buying an asset with the aim of making money on its growth.
2. Short 📉
Selling an asset you don't have and then buying it back at a lower price.
3. Order ✏️
An order to buy or sell an asset on an exchange. It can be market (Market) or limit (Limit).
4. Stop-Loss 🛑
Automatic order to limit losses.
5. Take-Profit 💰
An order that locks in profit when a certain level is reached.
6. Risk Management 🛡️
A system that helps manage capital and limit losses.
7. Market Capitalization (Market Cap) 🏦
The total value of all coins of a particular asset in circulation.
8. Volume 🔄
The number of bought and sold assets over a certain period.
9. Volatility ⚡
Price fluctuations of an asset. High volatility means sharp price jumps.
10. Fundamental Analysis 📊
Valuation of an asset based on its fundamental characteristics, news, and project economics.
11. Technical Analysis 📈
Analysis of charts and indicators to predict price movements.
12. Forks 🔧
Changes in the blockchain that create a new branch (e.g., Bitcoin and Bitcoin Cash).
13. Dump and Pump 💥
• Dump - a sharp price drop of an asset.
• Pump - artificial price increase.
14. HODL 🙌
A term meaning long-term holding of an asset, regardless of price fluctuations.
15. FOMO (Fear of Missing Out) 😨
Fear of missing out, often leading to emotional purchases.
16. ATH (All-Time High) 📌
The maximum price of an asset over all time.
17. Bear Market 🐻
A period of prolonged price decline.
18. Bull Market 🐂
A period of prolonged price increases.
19. Diversification 🗂️
Distribution of investments among different assets to reduce risks.
20. DEX and CEX 🔐
• DEX - decentralized exchanges (without intermediaries).
• CEX - centralized exchanges (e.g., Binance).
Where do traders and crypto enthusiasts most often get confused?
1. Investor vs Trader
• Investors are focused on long-term investments, studying projects and analyzing fundamental factors.
• Traders focus on short-term profits, using technical analysis and often making trades.
2. Wallets
Many confuse hot and cold wallets:
• Hot wallets (online) are convenient but less secure.
• Cold wallets (offline) are protected from hacks but require a physical device.
3. Cryptocurrency vs Token
• Cryptocurrency (e.g., Bitcoin) operates on its own blockchain.
• Tokens (e.g., UNI) are issued on third-party blockchains such as Ethereum.
4. Fundamental vs Technical Analysis
Beginners often think that only one of these approaches can be used. In fact, their combination yields better results.
5. HODL and Stop-Loss
Some confuse long-term holding (HODL) with ignoring risk. Even long-term investors use stop-losses to protect capital.
6. Volatility
Many perceive volatility as a threat, but experienced traders see it as an opportunity to profit from price fluctuations.
7. Airdrop Tokens and Fraud
People often confuse honest token giveaways with fraudulent schemes. Never send funds for 'confirmation of participation'!
📝Dear👇🏻
Knowledge of terms and understanding their meanings is the first step to success. Every trader and investor should strive for education and avoid common misconceptions. In the crypto world, mistakes can be costly, but a knowledgeable approach reduces risks and opens the way to stable income. 🚀