Basic Terms You Should Know As A Cryptocurrency Trader
Cryptocurrencies are one of the most attractive assets to invest in today, but it is essential to understand the basic terms to better understand the market and analyze its movements. Here are the most important of these terms:
1. Resistance ๐ง๐
Resistance refers to a price level that the market finds difficult to break through due to excessive selling. For example, if a currency encounters resistance at $100, it means that there is selling that is keeping the price below that level.
2. Support ๐ก๏ธ๐
Support is a price level that is difficult to break downward due to high demand. It serves as protection against a sharp price decline.
3. Liquidity ๐ง๐ฑ
Liquidity means the ease with which an asset can be converted into cash without significantly affecting the price. Markets with high liquidity are more stable and smoother to trade.
4. Volatility ๐ช๏ธ๐
Volatility refers to the speed and magnitude of price changes. Cryptocurrencies are known for their high volatility, which makes them an opportunity for big profits, but also increases risk.
5. Trading Orders ๐โ๏ธ
Market Order: Instant execution of trades at the best available price.
Limit Order: Execute trades when the price reaches a pre-determined value.
Stop Order: Converts to a market order when the price reaches a certain limit.
6. Trading Volume ๐๐
It represents the total amount of assets traded in the market during a given period, and is an indicator of market activity and investor interest.
7. Market Cap ๐ต๐
It is calculated by multiplying the current price of the currency by the number of available units, and is used to determine the size of the project and its importance in the market.
