Do crypto words like HODL and FOMO feel overwhelming? We help you navigate the meaning of these terms in this article for a better crypto experience.
When a person is new to the crypto trading market, it might be confusing to understand a few terms like FOMO, ATH, HODL, etc. Whether it is a stock, forex, or cryptocurrency market, these trading terms will appear frequently.
Before going to learn about the technical aspects of trading, getting to know these terms and understanding them is necessary for every new trader. The trading terms will help the traders to keep up with the latest news of the market. Check out crypto trading terms that are often used by experienced traders below!
1. Fear, Uncertainty, and Doubt (FUD)
Though FUD is not entirely a trading term, it is used in financial markets. FUD is a strategy used by some people to instil fear and doubt about a particular company, product, or project. They have the intention to gain an advantage somehow by spreading damaging news.
The term FUD is quite common in the cryptocurrency market. Investors enter a short position in an asset and then spreads misleading news about it when their position is established. As a result, they expect to make large profits by short-selling this particular asset.
It's hard to know whether information like this is true or false. Consider both sides of the argument, and the best approach is to think about what people can get by sharing these kinds of news or opinions in public.
2. Fear Of Missing Out (FOMO)
FOMO is used to describe the emotion of investors. When there are growing expectations about an asset, investors will fear on missing out the opportunity to make profits. This results in a sudden surge of buying by all kinds of investors. When the asset is brought by a herd due to FOMO, the price increase massively even if it wasn’t possible before.
Buying or selling an asset due to FOMO changes the usual rules of the markets. This can lead to both bull or bear markets based on what the majority of investors are doing with their assets. The traders who try to counter-trade will have a hard time in these kinds of situations.
At first glance, it looks like it is spelled wrong — and that is right. Originally, the term appeared in a famous post on the BitcoinTalk forum in 2013. The title of the post was: I AM HODLING. It was a drunken spelling mistake but it blew up as a meme.
Crypto enthusiasts loved it and started using it as a term for the strategy of buying and holding crypto assets for a long time.
The other full form of HODL is Hold On to Dear Life. Investors who hold on to the assets despite price dips are called HODLers. Bitcoin hodlers generally have a high conviction and many of them intend to hold on to bitcoin for a longer period.
The term BUIDL is derived from HODL. The term describes people in the crypto industry who continue to build the crypto and blockchain ecosystem despite the price fluctuations. BUIDLers work towards their goal by having a vision of bringing a change in the world with blockchain and cryptocurrencies innovations.
The term is used to explain the mindset of people who aim to bring this technology to the masses, without being affected by market price changes. BUIDLers believe that if they keep building with a long-term mindset, they will likely perform well in the long run.
The crypto term SAFU originated from a meme video uploaded by Bizonacci. It featured Binance CEO, Changpeng Zhao (CZ), and the meme video went viral in the crypto community. In response to that, Binance has established the Secure Asset Fund for Users (SAFU). It is an emergency insurance fund funded by 10% trading fees. SAFU covers the loss of funds in extreme cases and stores the funds in a cold wallet.
6. ROI (Return On Investment)
ROI term is used to measure the performance of an investment. ROI means the return on investment and it compares how much profit or loss the investors made from the original investment. It also makes it easy to compare the performances of different investments.
ROI = Currency value - Original cost / Original cost
7. ATH (All-Time High)
As the term suggests, ATH means the all-time high value of an asset. For example, the all-time high value of bitcoin is $64,863 on 14 April 2021. Every investor who bought bitcoin at any stage will be in profit when it reaches a new ATH.
When an asset breaches its ATH, no investors would want to sell and exit at break-even. This is the reason, investors refer to ATH as “blue sky breakouts” because they won’t be any obvious resistance areas ahead.
8. ATL (All-Time Low)
ATL is exactly the opposite of ATH. ATL or All-Time Low refers to the lowest price of an asset. Several stop-limit orders may trigger when the previous ATL is breached and it leads to a further dip in price. As there is no price history below the previous ATL, there is a chance for the asset’s price to keep going down lower and lower. As there are no logical reasons for it to stop, buying during those times is risky.
9. DYOR (Do Your Own Research)
When people want to invest in a volatile market like cryptocurrencies, it is always recommended to do their own research instead of depending on another person’s ideas and predictions. Inventors need to do their own research like fundamental and technical analysis rather than relying on others.
Anyone who wants to become a successful trader needs to do their own research and come up with a unique trading strategy. Many successful traders will have completely different strategies when compared to average investors. The idea is to do the research, come to a conclusion, and make the decisions on their own without depending on external advice.
10. DD (Due Diligence)
Due Diligence (DD) is related to DYOR. The investigation that a rational person or a business needs to make before committing to an agreement with another party is known as DD. Business entities are required to do their due diligence to avoid the potential red flags.
The same is the case with investments. When investors are exploring to make any investment, they need to do their own due diligence on the asset to make sure that take all the possible risks into account. Otherwise, they will end up making wrong decisions.
12. AML (Anti Money Laundering)
AML refers to the rules and regulations of the financial industries to eliminate potential frauds. It prevents criminals from ‘laundering’ their illegal money clean by hiding or disguising it as legal money.
Criminals search for ways to hide their true sources of income. Because of the complex nature of financial markets like crypto, it is possible to launder money in different ways. AML rules involve financial institutions such as banks to monitor the customers’ transactions and they need to report the suspicious activities to the concerned officials.
13. KYC (Know Your Customer)
KYC or Know Your Customer process is a usual procedure used by the financial institutions to verify the identity of the users. The main purpose of KYC verification is to avoid money laundering. KYC guidelines are a part of many Anti-Money Laundering (AML) policies.
Every financial institution like a bank, stock exchange, the trading platform has to comply with the national and international guidelines. For instance, the New York Stock Exchange (NYSE) has to comply with the regulations of the US government.
The crypto term ‘whales’ is used to refer to individuals or entities that hold large amounts of a particular cryptocurrency. As the largest cryptocurrency Bitcoin is not completely anonymous, we can see the addresses of people who own a lot of Bitcoin. Some Bitcoin whales own hundreds of thousands of Bitcoins. As whales hold a huge percentage of coins, they can control the price changes of cryptocurrencies.
15. To the Moon/Mooning
To the moon or mooning are crypto trading terms that are used to describe the rising price of a cryptocurrency. When we say that the price is mooning, it means the price of a cryptocurrency is skyrocketing or increasing rapidly. Common phrases used in crypto trading are “Bitcoin is going to the moon”, “Prices are mooning”, etc.
16. Pump and Dump
The crypto term ‘Pump and dump’ is basically a manipulation scheme. Scammers will buy a cryptocurrency and then inflate the price of the coin artificially, by spreading misinformation. Once the coin is bought by a group of people, its price will be increased or pumped. Then the scammers will start selling it off or dumping it. Pump and dump schemes are like an open secret in the community of crypto traders.
Lambo is a short form of Lamborghini, an exotic Italian sports car. Crypto traders often use this term to refer to their excitement of getting rich from their crypto investments. Lambo become popular in the early days because traders used to write “When Lambo?” in crypto forums when cryptocurrency prices rise.
Some crypto investors have managed to own a Lamborghini car by capitalizing on Bitcoin’s market movements. As a result, wealthy investors made buying Lamborghini ‘a symbolic gesture’ of getting rich from crypto investments.
So, which term is your favorite?
The crypto trading terms seem difficult to understand for beginners. But they are easy to understand and use in daily life once their meaning is known. New traders need to watch out for emotion-based decisions like FOMO and FUD to avoid making wrong decisions. It is always recommended to DYOR and HODL for a long time. Tell us which is your favorite terms by commenting below!