Recommended Learning Flow
- Market Participants → who moves price
- Market Mechanics → how price moves (liquidity, order flow)
- Macro & Policy → the water level (FCI, FOMC, QE/QT)
- Market Regimes → which playbook to use (trend/range/risk-on/off)
- Derivatives → the amplifiers (OI, funding)
- On-Chain → BTC-specific valuation layer (MVRV)
- Execution & Risk → do no harm (VWAP is execution; add risk later)
Market Participants
| Term | Plain English | Why it matters |
|---|---|---|
| Market Maker | Posts continuous bids/asks to keep markets liquid. | Shapes spreads, slippage and intraday volatility. |
| Smart Money | Institutional/insider capital that moves early. | Following their positioning gives leading context. |
| Whale | Entity with very large holdings. | Their transfers can trigger moves or reveal accumulation. |
| Dealer | Intermediary hedging client flow (often options). | Dealer gamma/delta can dampen or amplify moves. |
| Prop Desk | Firm trading its own capital. | Runs MM/stat-arb/HFT; impacts microstructure. |
| Arbitrageur | Exploits price gaps across venues. | Keeps prices aligned; reduces mispricing. |
| Retail Trader | Individual trader with small account. | Crowded retail extremes can be contrarian signals. |
Market Structure & Mechanics
| Term | Plain English | Why it matters |
|---|---|---|
| Liquidity | Ease of trading size without moving price. | Low liquidity = higher slippage & squeeze risk. |
| Order Flow | Net aggressive buy/sell pressure. | Reveals short-term intent and absorption. |
| Spread | Ask − Bid. | Direct trading cost; tight spreads are efficient. |
| Slippage | Difference between expected and fill price. | Rises in fast/illiquid markets. |
| Support / Resistance | Levels where buying/selling appears. | Breaks/holds guide entries and risk. |
| Breakout | Move out of a range/level with momentum. | Often starts a new trend leg. |
| Liquidity Sweep | Run through stops to fill large orders. | Can precede reversals/continuations. |
Trading Jargon
| Term | Plain English | Why it matters |
|---|---|---|
| Scalping | Very short-term trades for tiny moves. | Needs precision and liquidity. |
| Swing Trading | Hold for days/weeks to ride swings. | Suits most retail with lower screen time. |
| Risk-Reward Ratio | Expected gain ÷ expected loss. | Core for evaluating setups. |
| Stop-Loss | Automatic exit at a level. | Prevents large losses; enforces discipline. |
| Take-Profit | Automatic exit at target. | Locks gains without monitoring. |
| Position Sizing | How much capital per trade. | Controls drawdowns and emotions. |
| Drawdown | Peak-to-trough portfolio decline. | Sets risk tolerance and leverage. |
Options Jargon
| Term | Plain English | Why it matters |
|---|---|---|
| Call / Put | Right to buy / sell at a strike. | Express upside/downside or hedge risk. |
| Strike Price | Fixed price in the contract. | Defines payoff zone. |
| Implied Volatility (IV) | Vol expected by options prices. | Drives premiums and strategy choice. |
| Delta / Gamma / Theta / Vega | Option sensitivities (“Greeks”). | Guide hedging and risk control. |
| IV Rank | IV vs its past range. | Buy low IV; sell high IV (in general). |
| Covered Call | Sell call against owned asset. | Income with capped upside. |
| Protective Put | Buy put to insure a long. | Limits drawdown at a cost. |
Futures Jargon
| Term | Plain English | Why it matters |
|---|---|---|
| Perpetual Futures | No-expiry futures with funding. | Dominant crypto instrument. |
| Open Interest (OI) | Active contracts outstanding. | Confirms participation and trend strength. |
| Funding Rate | Payments between longs/shorts. | Aligns perp with spot; extremes = crowding. |
| Basis | Futures − Spot price. | Carry/arbitrage signal; sentiment gauge. |
| Contango / Backwardation | Curve above / below spot. | Impacts roll yield and outlook. |
| Liquidation | Forced close when margin fails. | Can cascade in volatile moves. |
Crypto Jargon
| Term | Plain English | Why it matters |
|---|---|---|
| HODL | Hold long-term through volatility. | Represents conviction strategy. |
| Diamond Hands | Holding despite large drawdowns. | Signals strong belief; affects sentiment. |
| FUD / WAGMI | Fear, Uncertainty, Doubt / “We’re all gonna make it.” | Community psychology drivers. |
| DeFi | On-chain financial services. | Enables permissionless lending/trading. |
| Rug Pull | Project drains liquidity/steals funds. | Do due diligence; trustless custody. |
| Gas Fees | Network transaction costs. | Affects UX and profitability. |
| Airdrop | Free tokens to users. | Bootstraps communities; user rewards. |