Glossary

49 terms, explained plainly. No circular definitions.

Backtesting — Running a strategy on historical data. Past results guarantee nothing, and self-deception is ea…
Basis — The gap between the derivative price and the spot price.…
Cross margin — The whole account balance backs every position. It survives bigger swings, but one bad trade ca…
Custody — Who actually holds the private keys. Funds on a venue are held by the venue, not by you.…
Dollar-cost averaging — Splitting a purchase into scheduled instalments instead of one entry.…
Drawdown — The fall from an equity peak to the current low. A 50% drawdown needs a 100% gain to recover.…
Exchange token — A token issued by the venue, usually for fee discounts. Holding it adds the venue's own risk to…
Expectancy — Average profit or loss per trade once win rate and reward-to-risk are combined. With negative e…
FOMO — Entering because price is running, not because of a plan. The most common cause of badly timed …
Funding rate — A periodic payment between longs and shorts on perpetual contracts, usually every 8 hours. Held…
Geo-blocking — A venue refusing users in certain countries. Circumventing it usually breaches the terms and ca…
Holding long term — Buying and holding through volatility instead of trading. For most people this has better expec…
Isolated margin — Only that position's own margin is at risk. One liquidation does not take the whole account.…
KYC — The venue's identity check. For Vietnamese living abroad this is the usual failure point: Vietn…
Leverage — Borrowing from the venue to hold a position larger than your capital. It multiplies gains, loss…
Limit order — Fills only at your price or better. You control the price but may not get filled.…
Liquidation — The venue force-closes your position when margin runs out. At 10x, price only has to move about…
Liquidity — The ability to trade size without moving the price. Thin liquidity is the main cause of slippag…
Long position — A bet that the price rises.…
Maintenance margin — The minimum margin ratio you must keep. Fall below it and you are liquidated.…
Maker order — A resting order that joins the book instead of filling immediately. Because it adds liquidity, …
Margin — The capital you post to open a leveraged position. When losses eat it, the position is closed.…
Market maker — A participant that quotes both sides continuously to keep the book liquid.…
Market order — Fills immediately at the best available price. Certain to fill, but you do not control the pric…
Open interest — The total value of open derivative contracts. Sharp increases often precede cascading liquidati…
Order book — The list of all resting buy and sell orders. It shows real liquidity, not advertised liquidity.…
Order flow — Reading executed trades in real time to infer buying and selling pressure.…
P2P trading — Buying and selling directly with another person through the venue's escrow. In Vietnam this is …
Paper trading — Practising with simulated money. Useful for mechanics, useless for the hard part: tolerating re…
Perpetual contract — A derivative with no expiry date, kept near spot price by the funding mechanism.…
Position size — How much of an asset a trade holds. It is decided by your loss limit and stop distance, not by …
Proof of reserves — A disclosure showing the venue holds assets matching customer balances. Quality varies enormous…
Regulated venue — A venue operating under a regulator's licence in a specific country. A licence in one country m…
Revenge trading — Sizing up right after a loss to win it back. The most common way one losing trade becomes a blo…
Reward-to-risk — Target profit divided by risk. A ratio of 2 means one win covers two losses.…
Risk per trade — The most you accept losing on one trade, usually 1–2% of the account. It is the single most imp…
Short position — A bet that the price falls.…
Slippage — The difference between the price you saw and the price you got. Worse with larger size or thinn…
Spot trading — Buying and selling the actual asset — no leverage, no liquidation. You only lose everything if …
Spread — The gap between the best bid and the best ask. A hidden cost: entering a position already puts …
Stablecoin — A crypto asset pegged to a fiat currency, usually the US dollar. It is the unit of account for …
Stop-loss — An order that closes the position at a level you set in advance. Place it on price structure, n…
Take-profit — An order that closes the position when it reaches your profit target.…
Taker order — An order that fills immediately against the resting book. Fast, but the most expensive. Beginne…
VIP tier — Fee discounts based on volume or token holdings. The published fee table is usually the lowest …
Volatility — How much price moves. High volatility makes the same leverage far more dangerous.…
Whale — An account large enough to move the price when it trades.…
Win rate — The percentage of trades that profit. Meaningless on its own without reward-to-risk.…
Withdrawal fee — What the venue charges to move assets out. Usually ignored in fee comparisons, yet larger than …