Crypto Trading Glossary

A plain-English glossary of the crypto-trading terms used across DEGEN.TERMINAL and DEGEN ACADEMY — from liquidations and funding to order blocks, expected value and loss aversion. Free, and no jargon left unexplained.

Market data & derivatives

Altseason — Altseason is a period when altcoins broadly outperform Bitcoin. It is often measured as the share of top coins that beat Bitcoin's return over a window such as 30 or 90 days. Altseasons tend to follow Bitcoin strength and rising risk appetite, and usually coincide with falling Bitcoin dominance.

Bitcoin dominance — Bitcoin dominance is Bitcoin's share of the total cryptocurrency market capitalization, shown as a percentage. Rising dominance means capital is rotating into Bitcoin (often during fear); falling dominance often signals an 'altseason' where altcoins outperform. It is a quick read on where money is flowing across the market.

Fear & Greed Index — The Crypto Fear & Greed Index is a sentiment gauge from 0 (extreme fear) to 100 (extreme greed), built from volatility, momentum, social and other inputs. Extreme fear can mark capitulation lows and extreme greed can mark euphoric tops, so contrarians watch the extremes rather than the middle.

Funding rate — Funding is a periodic payment between long and short traders that keeps a perpetual futures contract tethered to the spot price. Positive funding means longs pay shorts (the crowd is leaning long); negative funding means shorts pay longs. Extreme funding signals crowded one-sided positioning, which often precedes a squeeze in the opposite direction.

Leverage — Leverage is borrowed capital that multiplies the size of a position relative to the trader's own funds. It amplifies both gains and losses, and crucially it shrinks the distance to liquidation — so high leverage means a normal pullback can wipe out a position before the idea has time to work.

Liquidation — A liquidation is the forced closing of a leveraged position when the trader runs out of margin — the exchange closes it at market price automatically. Long liquidations create forced selling (pushing price down); short liquidations create forced buying (pushing price up). Because each liquidation moves price toward more liquidations, they cascade, which is why crypto can drop or spike several percent in minutes.

Long and short — Going long means betting that price will rise; going short means betting that price will fall. In derivatives a short is opened by selling a contract you don't own and buying it back later. The balance of longs versus shorts, and where their stop-losses sit, is a major driver of short-term price moves.

Long squeeze — A long squeeze is a sharp drop caused by over-leveraged longs being liquidated. As price falls into a cluster of long liquidation levels, the forced selling pushes price lower and triggers further long liquidations. It is the mirror image of a short squeeze and is common after periods of greedy, heavily-long positioning.

Market capitalization — Market capitalization is a coin's current price multiplied by its circulating supply — a rough measure of its total size. It is used to rank coins and to gauge how much capital would be needed to move one. A low price does not mean 'cheap': a coin with a huge supply can have a large market cap.

Open interest — Open interest (OI) is the total number of derivative contracts currently open — a measure of how much money is in the market. Rising OI with rising price means new money is entering and a move is real; rising OI with falling price means new shorts are piling in; falling OI usually means positions are closing and a move is ending.

Perpetual futures — A perpetual future (or 'perp') is a derivatives contract that tracks an asset's price but never expires. Instead of a settlement date, it uses a funding rate to keep its price tethered to spot. Perps dominate crypto trading volume and are where most leverage, funding and liquidation activity happens.

Short squeeze — A short squeeze is a sharp rally caused by shorts being forced to buy back their positions. When price rises into a cluster of short liquidations, that forced buying pushes price higher, triggering more short liquidations in a cascade. Extremely negative funding and high open interest are classic squeeze fuel.

Slippage — Slippage is the difference between the price you expected and the price you actually got when an order fills. It grows in fast or thin markets and on large orders, and it is one reason market orders during volatility can fill far from the last printed price.

Spot market — The spot market is where you buy or sell the actual asset for immediate delivery, at the current price, with no leverage or expiry. It contrasts with derivatives like perpetual futures. Spot buying and selling pressure underlies the 'real' supply and demand for a coin.

Charting & method

Break of Structure (BOS) — A Break of Structure is when price breaks a swing point in the direction of the existing trend, confirming continuation. In an uptrend, breaking the prior high is a bullish BOS. It is distinct from a Change of Character, which breaks against the trend and hints at a reversal instead of continuation.

Candlestick — A candlestick summarizes price over a period using four values: open, high, low and close. The body shows the open-to-close range (who won the period) and the wicks show the extremes that were rejected. A candle is information, not a signal — the meaning comes from where it forms, such as at a key level.

Change of Character (ChoCH) — A Change of Character is the first break of structure against the prevailing trend — an early warning that momentum may be shifting. A ChoCH alone is not a confirmed reversal; traders typically wait for a new higher low (or lower high) and then a Break of Structure in the new direction before trusting it.

CVD (Cumulative Volume Delta) — Cumulative Volume Delta tracks aggressive buying minus aggressive selling, accumulated over time, to reveal who is really in control. Price rising while CVD falls warns of a rally being quietly sold into; price falling while CVD rises signals hidden accumulation and is one of the strongest reversal tells. On a sweep, a sharp CVD jump confirms a genuine move.

Equal highs and equal lows — Equal highs (EQH) and equal lows (EQL) are two or more swing points at nearly the same price. Because they are obvious, stop-losses pile up just beyond them, forming pools of liquidity that larger players target with a sweep. A cluster of stops above price can be fuel for a move up; a cluster below can fuel a move down.

Fair value gap (FVG) — A fair value gap is an imbalance left by a violent move, defined as the gap between the first candle's high and the third candle's low (or vice versa). Markets tend to revisit and 'fill' these gaps, so an unfilled FVG can act as a magnet and a reaction zone. It pairs powerfully with an order block at the same level.

Liquidity sweep — A liquidity sweep is when price spikes through an obvious level — such as equal highs or lows — to trigger the stop-losses clustered there, then quickly reverses back. Large players use those stops as the liquidity needed to fill their own orders, so the real move often begins after the sweep, not before. Order flow (CVD) helps tell a genuine sweep from a failed breakout.

MACD — MACD (Moving Average Convergence Divergence) is a momentum indicator built from the difference between two moving averages, plus a signal line and a histogram. Crossovers and the histogram flipping are used to gauge momentum shifts. Like all indicators it lags price and works best as confirmation, not as a standalone signal.

Market structure — Market structure is the sequence of swing highs and lows that defines a trend: higher highs and higher lows is an uptrend, lower highs and lower lows is a downtrend, and no clear sequence is a range. Structure should be read from closed candles, not wicks, and the higher timeframe's structure takes priority over the lower one's.

Order block — An order block is the last opposite-direction candle before a strong impulsive move — a bullish order block is the final down candle before a sharp rally. It marks the area where a large player likely filled a sizeable order, so price often reacts to it again when it returns. Untouched order blocks in a discount zone are considered the most reliable.

Premium and discount — Splitting a price range at its 50% midpoint defines premium (the upper half, 'expensive') and discount (the lower half, 'cheap'). A common disciplined bias is to look for longs only in the discount zone and shorts only in the premium zone, improving the reward-to-risk of entries. The zones depend on which range you measure.

RSI — The Relative Strength Index is a momentum oscillator from 0 to 100 that measures the speed and size of recent price changes. Readings above 70 are often called overbought and below 30 oversold, but in strong trends RSI can stay extreme for a long time. Its most useful signal is divergence — when price and RSI disagree.

Support and resistance — Support is a price zone where buying has repeatedly stepped in; resistance is a zone where selling has. They are areas, not exact lines, and their strength comes from the number of independent factors pointing at them. When a support breaks it often flips into resistance, and vice versa — known as role reversal.

Volume profile & Point of Control — A volume profile shows how much volume traded at each price rather than over time. The Point of Control (POC) is the price with the most volume — the strongest magnet on the chart — and the Value Area holds roughly 70% of volume. Low-volume areas tend to be crossed quickly, while high-volume areas act as strong support and resistance.

VWAP — VWAP (Volume-Weighted Average Price) is the average price over a period weighted by volume, so it reflects where most trading actually happened. Institutions use it as a fair-value benchmark for execution, which makes it act as a magnet and a dynamic support/resistance. An anchored VWAP starts from a chosen event, like a major high or low.

Wyckoff accumulation — Wyckoff accumulation describes how large players quietly build positions at a market bottom, in a repeatable sequence: a Selling Climax, an Automatic Rally, a Secondary Test, an optional Spring (a final stop-hunt below the low), a Last Point of Support, and finally a Sign of Strength. Recognizing the phase helps a trader tell a true bottom from a temporary pause.

Risk & statistics

Drawdown — A drawdown is the drop from a peak in account value to the following trough, usually shown as a percentage. Recovery is non-linear: a 30% drawdown requires a 42.8% gain to get back to even, and a 50% drawdown needs 100%. Keeping maximum drawdown low (often under 20%) is a core goal of risk management.

Expected value (EV) — Expected value is the average profit or loss of a trade over many repetitions: EV = probability of winning × reward − probability of losing × risk. A strategy with positive EV makes money over time even if it loses individual trades. It is the single metric that determines long-run profitability, which is why a low win rate can still be highly profitable with a large enough reward-to-risk.

Hurst exponent — The Hurst exponent is a statistical measure of whether a price series trends or reverts to its mean. Values above 0.5 indicate trending behaviour, around 0.5 indicate randomness, and below 0.5 indicate mean-reversion. Traders use it as a filter to decide whether trend-following or counter-trend tactics fit the current regime.

Kelly criterion — The Kelly criterion is a formula for the position size that maximizes long-run growth given your edge and reward-to-risk. Full Kelly is too aggressive in practice because small errors in estimating win probability can ruin an account, so traders use a fraction (half Kelly or less) and cap each trade at a few percent of capital.

Position sizing — Position sizing is deciding how much capital — and therefore how much risk — to put into a trade. The widely-taught rule is to risk only 1–2% of the account per trade, so that no single loss or losing streak can do lasting damage. Sizing, not entries, is what most often separates traders who survive from those who blow up.

Profit factor — Profit factor is gross profit divided by gross loss across a set of trades. A value above 1.0 means the strategy is net profitable, and above roughly 1.5 suggests a genuine, durable edge. It is one of the simplest single numbers for judging whether a strategy actually works.

Risk-reward ratio (R:R) — The reward-to-risk ratio compares how much you stand to gain against how much you risk on a trade. At 1:2 you risk one unit to make two. The higher the ratio, the lower the win rate you need to break even — the break-even win rate is 1 ÷ (1 + R:R), so a 1:2 trade only needs to win about 33% of the time.

Sharpe ratio — The Sharpe ratio measures return per unit of total risk (volatility). A higher Sharpe means smoother, more efficient returns; above 1.0 is generally considered solid. Because it penalizes all volatility, including upside, it can understate strategies that have large winning trades.

Sortino ratio — The Sortino ratio is a refinement of the Sharpe ratio that only penalizes downside volatility, not big winning trades. For trading strategies with asymmetric, high reward-to-risk payoffs it is often more informative than Sharpe, because it rewards rather than punishes large gains.

Stop-loss — A stop-loss is a pre-set exit that closes a trade once price reaches a level where the original idea is proven wrong — not an arbitrary percentage. It should be placed when the trade is opened and never moved against the position. Moving or deleting stops is one of the most expensive habits in trading.

Take-profit — A take-profit is a pre-set exit that closes some or all of a position once price reaches a target. Many traders scale out — taking partial profit at a first target and moving the stop to break-even — to lock in gains while leaving room for a larger move. Deciding targets before entering removes emotion from the exit.

Win rate — Win rate is the percentage of trades that close in profit. On its own it is misleading: a 70% win rate can lose money if the losers are large, while a 35% win rate can be very profitable with a high reward-to-risk. Always read win rate together with reward-to-risk and expected value.

Trading psychology

Disposition effect — The disposition effect is the well-documented tendency to sell winning positions too early and hold losing ones too long. It is driven by loss aversion and the desire to feel right, and it quietly turns a neutral strategy into a losing one. The fix is to let the market, not your feelings, decide exits.

FOMO — FOMO — Fear Of Missing Out — is the urge to jump into a move that is already running because watching it go without you feels unbearable. It typically gets traders in near the top, right before a pullback. A feeling of urgency is itself an anti-signal: the more urgent a trade feels, the worse it usually is.

Loss aversion — Loss aversion is the cognitive bias where the pain of a loss is felt far more strongly than the pleasure of an equivalent gain — studies put it around 2.25 times. In trading it causes people to hold losing positions too long (avoiding the pain of realizing the loss) and to close winners too early, which is exactly backwards.

Market emotion cycle — The market emotion cycle is the repeating arc of crowd sentiment that drives price: optimism, excitement, euphoria (the top, maximum financial risk), then anxiety, denial, panic and capitulation (the bottom, maximum opportunity), followed by disbelief and hope. Smart money tends to sell into euphoria and buy during capitulation.

Prospect theory — Prospect theory, from Kahneman and Tversky, describes how people actually evaluate risky choices: losses loom larger than gains, decisions are made relative to a reference point (like your entry price), and small probabilities are overweighted. It explains many trading mistakes, such as cutting winners and gambling to avoid a sure loss.

Reflexivity — Reflexivity, a concept from George Soros, is the feedback loop in which participants' beliefs change the very reality they are observing — rising prices attract buyers, which pushes prices higher, reinforcing the belief. The loop eventually breaks when the narrative runs out of new buyers and reality fails to confirm expectations, often violently.

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