Whether you are a day trader, crypto-enthusiast, or just new to crypto. There are some trading terms that you should familiarize yourself with. Just like texting acronyms, there are also a lot of trading acronyms that you should know. You may know a few of these, but we will go through all these acronyms thoroughly so you’ll better understand it! Hopefully, by the end of the article you will be just like a crypto day trader!
FUD: The spread of disinformation and fear to gain an advantage
FOMO: That feeling when you didn’t get invited to a party or missed out on some profits
HODL: If you are a believer then you better hold it for a long time!
BUIDL: Build, build, build, we need your help to build the next financial system!
SAFU: Don’t worry your funds are safe!
Return on Investment (ROI): How much profit did you make on your investment?
All-Time High (ATH): The highest price of an asset
All-Time Low (ATL): The lowest price of an asset
Do Your Own Research (DYOR): Always verify and validate
Due Diligence (DD): Always make sure to do research and ensure who you’re dealing with
Anti Money Laundering (AML): Regulations that prevent criminals from stealing money
Know Your Customer (KYC): Procedure that ensures that you know your client
The first of the 12 Terms All Crypto Lovers Should Know is FUD. Probably one of the scariest things to hear when you’re in a financial market or just anything in general! FUD stands for fear, uncertainty, and doubt. FUD is a strategy of disinformation which is widely used in sales, marketing, public relations, politics, cults, and propagandas. The main usage of the FUD is to spread misleading information about something and that can be basically about anything! This is an extremely powerful tool as it can cause possible drops in the financial markets with the misinformation. And of course, FUD plays a big role in the cryptocurrency space as well.
A possible example of this is if an investor enters in a short position of an asset and then releases misinformation or news. This would allow the investor to earn large profits by short selling or buying put options. Investors can also position themselves with OTC deals before too. Therefore, before making any decision to buy/sell make sure to always consider all sides of the argument and don’t forget that people may always have incentives when sharing news.
This is probably a feeling that many of you get when you don’t get invited to a party or a dinner. This is kind of the same but think of it in the financial world. Investors may feel this when they see a bull market rally, and they have yet to buy anything. This acronym relates a lot to the investors’ emotions and the feeling that they have when they have missed out on the opportunity to buy on a possible profit opportunity. The FOMO can cause a large shift in price movements and it is probably one of the reasons why the current stock market has reached its current highs. Oftentimes this can result in a big bubble in the market and may lead to more damage to the public if it pops.
One of the most crucial terms of cryptocurrency is HODL. If you are a true believer of Bitcoin or cryptocurrency in general then you will most likely be a “HODL”er. HODL is derived from the misspelling of “hold”. It is the basic idea that you would buy and hold cryptocurrency. The term originally came from a BitcoinTalk forum back in 2013 when a user misspelled the title and said “I AM HODLING.” If you are a true believer of cryptocurrencies in general then you would have a strong conviction to hold onto the investment for a long period of time.
BUIDL is the derivative term of HODL. The term usually refers to the participants of the cryptocurrency ecosystem that continuously build regardless of all the changes in price. The main idea of this acronym is that true believers of Bitcoin will build and expand the ecosystem regardless of a bear market. Therefore, you can think of “BUIDL”ers as those who genuinely care and want to bring blockchain and cryptocurrencies to the world!
The mindset of “BUIDL”ers is that cryptocurrencies are not just a speculative asset and instead it is something that will transform our current financial landscape. This serves as an important reminder to continue creating technology that will one day be adopted and used by billions of people around the world. You can think of this like the early stages of Amazon or Apple hoping to just build something that would one day transform the world. Lastly, “BUIDL”ers know that you must have a long-term mindset in order to prevail in the long-run.
The term SAFU comes from a meme uploaded by Bizonacci. It basically incorporates Binance’s CEO, CZ Zhao, saying “funds are safe” during the unscheduled platform maintenance. The meme went viral in the cryptocurrency space. It has also resulted in Binance creating a Secure Asset Fund for Users which is an emergency insurance fund that is funded by 10% of trading fees. The idea of the SAFU is that it will help cover the funds if something extreme occurred. Hence, you might have heard the phrase “your funds are safu” quite often.
ROI is a pretty common term if you are into investing. This term often refers to the measurement of an investment. The measurement is done through the returns of the investment relative to its original cost. This is an extremely good way to compare different performances of different investments. If you want to calculate the ROI, you can also do it with the following formula:
ROI = ((Current Value – Original Cost) / Original Cost)
Let’s go through an example so you better understand this. Let’s say that you bought Bitcoin at 10,000, and the current price of Bitcoin is now at 11,300.
By using the formula,
ROI = ((11,300 – 10,000)/10,000)
This would give a ROI of 0.13, which means you are up 13% from your original investment.
It is important here to note that the ROI is only a part of the equation when you think about investing in something. You should also take a look into risk, liquidity and the slippage to ensure that you will actually make a return.
This term should be pretty easy to understand right? I am sure if you just read the name you will know what it means. ATH refers to All-Time High which refers to the highest recorded price of an asset. Let’s go over an example so you can better understand this. The highest ever recorded all-time high of Bitcoin was reached back in 2017 when it hit $19,891 USD per BTC. This meant that this was the HIGHEST price that Bitcoin ever reached and the highest price that it was traded for on the market. However, investors should always do research to ensure that there is reasoning behind the value of the stock reaching an ATH. Otherwise, it can be very likely that it is just a bubble and with that bursting it will just do more damage to your investment.
Having mentioned ATH, there is also ATL which refers to the all-time low. This is pretty simple to understand and it is just the all time lowest price of an asset. Similar to breaking a ATH, breaking an ATL also has similar effects but in the other direction. When an asset reaches an ATL it may trigger a lot of stop orders which can drive it even lower. And given the uncertainty with the asset when it reaches a ATL, it creates uncertainty for what the future may behold for the asset. Without any logical evidence or points or an asset to stop, it can just keep going forever. Hence, investors should always be careful when buying into a stock that reaches a ATL.
This is probably one of the most crucial and important terms before you make any investment. DYOR stands for “do your own research”. When it comes to investing in something, you should always do your own research. One common phrase that is often thrown around in the space is “don’t trust, verify”. The most successful investors that have ever lived like Warren Buffeet also encourages investors to do your own research before making a decision.
If you want to be successful in the financial market, you must be able to do your own research and create your own trading technique based on that. With research, it can also lead to a lot of disagreements with some people believing a bull market whereas others may see a bear market. Of course, there is always going to be different opinions thrown around, so it is important for you to make your own decisions and don’t let others’ decisions influence you!
When you think of DD, you often would also somewhat correlate it to DYOR. DD stands for “Due Diligence”, it refers to the act of investigating or exercising care that a person normally undertakes before entering an agreement or making a contract with another party. It is expected of a company that before they reach an agreement with any party, they must first do due diligence on one another. This helps to ensure that there are not potential red flags that exist with the counterparty. By doing due diligence, you will also be able to ensure the safety of your company and to make sure that the agreement occurs. The same exact thing goes for investing, you should always do your own due diligence before making a decision on a purchase. Do your due diligence to prevent wrong choices from being made.
AML also known as “anti money laundering” refers to the regulations, laws, and procedures that are in place to prevent criminals from illegally obtaining money and claiming it as their income. The AML procedure makes it a much more difficult process for criminals to launder their money. Of course, that won’t prevent criminals from stopping but the AML requries financial institutions such as the banks to monitor transactions. This makes it harder for criminals to launder money. Because all activities will be overwatched making criminals less likely to get away with funds.
The final of the 12 terms all crypto lovers should know is KYC or “Know Your Customer”. KYC is a crucial term that is often used in exchanges and OTCs. The KYC guidelines ensure that the company can verify the customer to prevent possible risks of money laundering. The procedure fits into a broader perspective of the AML. KYC does not just comply with participants in the financial industry; the term is also used in a wide variety of other industries. It is a fundamental process that ensures companies are dealing with the right customers.
Hopefully you were able to pick up some of these crypto terms by the end of this article. If you would like to learn more about cryptocurrencies, be sure to check out our other articles! The crypto space is still nascent and there will be more and more terms coming to existence.
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