10 Popular Terms Every Crypto Trader Should Know
10 Popular Terms Every Crypto Trader Should Know
In the world of cryptocurrency trading, there are far too many calculations that change in a matter of minutes. It’s unsurprising that cryptocurrency traders use a variety of words, acronyms, and abbreviations. These concepts primarily apply to a particular principle of cryptocurrency investing, wealth banking, or general finance.
These words can be misleading if you are new to cryptocurrency trading. As a result, we have described some of the most basic words that any crypto trader/investor should understand.
#1 FOMO — Fear of Missing Out
FOMO stands for “fear of missing out,” and it refers to the action of panic-buying cryptocurrency. Traders may purchase cryptocurrencies in a panic if they believe they will lose out on a lucrative opportunity. FOMO-ing choices are motivated by raw impulses, as opposed to a calculated decision, which involves critical reasoning and business research.
Traders’ FOMO usually means they’re struggling with a stock market. Veterans in crypto trading might use the same word to describe those who are new to trading and who purchase assets as a result of the general buzz surrounding crypto.
The trading technique of purchasing and maintaining in the cryptocurrency industry is referred to as HODL. Many that adhere to the HODL strategy will accumulate cryptocurrency assets and hang onto them even through significant price declines. Naturally, they seek long-term gains by turning the funds into long-term investments.
Investors who believe in the potential of a single cryptocurrency can also use the HODL strategy. Many that use the technique are sometimes referred to as HODLers, but this term does not carry the same negative connotation as FOMO. Many that have HODL-ed Bitcoin in recent years may have had a positive experience.
#3 ROI — Return on Investment
Return on Investment, or ROI, is not a term exclusive to cryptocurrencies. Traders often use ROI calculations to explain how their investments performed in every market. You can determine the ROI of just about any investment by subtracting the asset’s initial price from its present price and dividing the result by the actual amount.
The return on investment (ROI) will show how much your investment has increased — or devalued — over time. Although the expression “return on investment” is frequently used, it is not the only phrase to keep in mind while calculating profit and loss. Other factors to remember include price risk and equity liquidity.
#4 DYOR — Do Your Own Research
In the crypto trading world, the word “Do Your Own Research” is self-explanatory. It encourages traders to conduct analysis before making business decisions. This suggests that a trader should not rely on pre-determined advice when purchasing crypto properties. DYOR is also linked to concepts such as Fundamental Analysis and policy development.
As you might be aware, cryptocurrencies are subject to the same threats as other properties. As a result, a trader should evaluate the details at their disposal and devise a plan, taking into account the views of customers.
#5 KYC — Know Your Customer
Know Your Customer is a series of guidelines that assists companies in recognizing the identity of their clients. KYC is associated with cryptocurrency trading and exchange sites in the field of cryptocurrency trading. Before authorizing a customer to exchange, these providers must check their identity and reputation. The KYC rules may vary depending on where the company is located.
To discourage money laundering, crypto-based organisations adhere to strict KYC regulations. KYC is not restricted to the cryptocurrency/investment domain. KYC regulations are also used by general organisations to ensure legality. As part of the KYC rules, you will be required to request documentation including a passport, social security card, proof of residence, or driving licence.
#6 DD — Due Diligence
Due Diligence refers to the research and caution that a reasonable individual or company may take when entering into an arrangement with another party. Assume a trader/investor wishes to purchase an asset. Every responsible person needs to be certain that there are no possible red flags in the transaction.
DD will assist traders/investors in being secure in their decisions. Depending on the circumstances, it provides you with a more in-depth view of the company behind the asset you want to participate in. Before bidding, buyers must weigh the costs and possible rewards.
#7 AML — Anti-Money Laundering
Anti-Money Laundering (AML) is a series of rules that cryptocurrency and conventional exchange sites use to deter money laundering events. KYC, as previously stated, is one of the components of the AML guidelines. AML is a series of guidelines that allows regulators to easily grasp the trading platform’s possible abuse.
For example, most regulators request that the trading site review consumer transactions and flag those that are irregular. Companies can adopt different AML structures depending on their position and the market in which they operate.
The term “All-Time High” applies to the peak valuation a certain commodity has ever achieved on a trading site. The ATH number is often listed in pairs, never alone. For example, the new All-Time High of the BIZZ/USDT pair is $1.15, set on February 8th, 2021. When an asset reaches its all-time high, nearly anyone who bought it before would benefit.
#10 FUD — Fear, Uncertainty, and Doubt
Fear, Uncertainty, and Doubt are not restricted to cryptocurrency trading. It relates to a trading technique that entails disseminating knowledge regarding a specific commodity or entity. The thought is that this flood of disinformation could instil anxiety, confusion, and distrust in other traders, causing them to make business decisions they would not have made otherwise.