When you start into margin trading of cryptocurrencies like Bitcoin you will probably don’t know all the important words and terms used in this context. In this glossary we will explain the most important ones to give you an overview.
Base currency – Quoted currency, means in the BTC/USD pair the BTC price is quoted.
Cross margin – Margin is the entire account balance for a chosen currency. If you use Cross Margin, the available balance is used by open positions to fund losses to keep them open.
Funding currency – This is the currency which is used to pay for the trade, e.g. you trade BTC/USD but are funding the trade with Euros.
Interest – Charged amount for borrowed funds, most times a percentage over a fixed period of time.
Isolated margin – Margin that is assigned to a certain position which is isolated from the rest of the account funds so the losses are limited to the “isolated margin”.
Leverage – Proportion of margin trades made with borrowed funds. 2x Leverage means you fund half of the trade, 10x 1/10, and so on.
Limit – Order type which is just executed at a specified price. The limit price have to be better for your trade, means buying order with a lower price, selling order with a higher price.
Liquidation – Closure for the trade which is reached when the available margin is too low.
Liquidity – Market depth. Good liquidity comes through the amount of traders and their buy/sell orders so other traders can easily enter and exit positions.
Long – Position which will make the trader profit if the price increases.
Margin – Portion of your own funds.
Market – Instantly executed order which takes the best available market offer to fill the trade.
PnL – Profits and loss, available for every trade.
Position – Open margin trade.
Quote currency – The part of the trading pair that the price is shown in. For example, with BTC/USD, USD is the quote currency and the price of BTC is quoted in USD.
Short – Sell position which will make the trader a profit when the price decreases.
Stop – An order that executes once a specific price is reached that is worse than the current market price.
Stop loss – Prevents further losses through set up of a price level on a position. It will be closed if this level is reached.
Take profit – Price target. If this is reached the position will be closed and the profits from the trade are locked.
Trailing stop – A trailing stop order: stop order with a limit that “trails” after market price.