Crypto trading glossary

Plain definitions of 20 crypto trading terms, from candlesticks, support and resistance to RSI, MACD, volatility, correlation, DCA and altcoin season, each linked to the free tool that uses it.

The terms behind the charts, signals and calculators on this site, each explained in a sentence or two, with a link to the tool where you can see it at work.

Candlestick

A bar that shows one period’s open, high, low and close. The body runs from the open to the close, the wicks reach the high and the low, and its colour shows whether the price rose or fell.

Support and resistance

Price levels where buying (support) or selling (resistance) has tended to stop a move. Traders draw them from earlier highs and lows or work them out as pivot points.

Trend line

A line through two or more highs or lows that shows the direction of a trend. A clear break through it can be a sign that the trend is changing.

Moving average (SMA, EMA)

The average closing price of the last N candles, recalculated every candle. The simple average (SMA) weighs every candle the same; the exponential one (EMA) weighs recent candles more, so it turns sooner.

RSI (Relative Strength Index)

A momentum oscillator from 0 to 100 that compares recent gains with recent losses, usually over 14 candles. 70 or above is called overbought, 30 or below oversold.

MACD

The difference between a 12- and a 26-period EMA, drawn with a 9-period EMA of itself as the signal line. The MACD crossing its signal line is read as a change in momentum.

Bollinger Bands

A 20-period moving average with a band two standard deviations above and below it. The bands widen when the price swings more and narrow when it calms down.

Candlestick pattern

A shape of one to three candles, such as a hammer, a doji or an engulfing candle, that traders read as a hint of a reversal or a continuation. A hint, not a forecast.

Volatility

How much a price swings. Realized volatility is the standard deviation of daily returns, scaled to a year; higher means bigger moves in both directions.

Correlation

How closely two prices move together, from −1 (opposite moves) through 0 (no relation) to 1 (in step), measured on their daily returns.

Market cap

A coin’s price times its circulating supply: what all coins in circulation are worth at today’s price. Coins are usually ranked by it.

Trading volume

The value traded over a period, usually the last 24 hours. More volume means more trades and usually a more reliable price.

Order book

The list of open buy and sell orders on an exchange at each price. It decides the price you actually get when you buy or sell.

Spread

The gap between the highest buy order and the lowest sell order, or between a coin’s price on two exchanges. A smaller spread means cheaper trading.

Stop-loss

An order that closes a trade when the price reaches a level you set, to limit the loss. Position sizing starts from the distance between entry and stop-loss.

Take-profit

An order that closes a trade at a profit when the price reaches a target you set.

DCA (dollar-cost averaging)

Buying a fixed amount at regular intervals, whatever the price, so you buy more when the price is low and less when it is high.

Altcoin season

A period in which most large altcoins beat Bitcoin. The altcoin season index counts how many of the 50 largest coins rose more than Bitcoin over the last 90 days.

Bitcoin dominance

Bitcoin’s share of the total crypto market cap. A rising share means money is moving into Bitcoin, a falling one into altcoins.

Pivot points

Support and resistance levels worked out from the previous day’s, week’s or month’s high, low and close, with formulas such as classic, Fibonacci, Woodie and Camarilla.

Cryptohopper Charts is made by Cryptohopper, the crypto trading bot platform founded in Amsterdam in 2017.