The crypto investing
glossary.
Clear definitions of the terms that matter when real capital is at risk: position sizing, leverage, liquidation, drawdown and more.
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- LeverageLeverage is borrowed exposure that lets you control a position larger than the capital you put up, magnifying both gains and losses.
- Liquidation priceThe liquidation price is the level at which an exchange forcibly closes a leveraged position because the remaining margin can no longer cover losses.
- Long positionA long position profits when the price of the asset rises.
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- Perpetual futuresPerpetual futures are derivative contracts that track a crypto asset's price with no expiry date, allowing long or short positions with leverage.
- Pig butchering scamA pig butchering scam is a long con in which a scammer builds trust over weeks, then steers the victim into a fake crypto investment platform and takes the deposits.
- Position sizingPosition sizing is deciding how large a position to take so that, if the trade hits its stop, the loss equals a fixed amount you chose in advance.
- Profit factorProfit factor is gross profit divided by gross loss over a set of trades. Above 1.0 means the trades made more than they lost.
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- Seed phraseA seed phrase is the 12 or 24 words that can restore a crypto wallet. Anyone who has it controls the funds.
- Short positionA short position profits when the price of the asset falls.
- Stop-loss orderA stop-loss order is an instruction to close a position automatically when price reaches a level where the trade idea is proven wrong.
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- Total exposureTotal exposure is the combined size and risk of all open positions, including how closely they move together.
- Trade thesisA trade thesis is a short written statement of what you believe the market will do, why, and what would prove you wrong.
- Trading journalA trading journal is a record of every position's thesis, entry, stop, size, result and whether the plan was followed.