In the world of cryptocurrency trading, there are far too many equations that change in a matter of seconds. Crypto traders use a number of terms, acronyms, and abbreviations, which is understandable. These concepts are often used to define a particular idea in crypto trading, investment management, or general finance.
FOMO stands for "fear of missing out," and it refers to the act of panic-buying crypto assets. Traders can purchase crypto assets in a panic if they believe they will miss out on a lucrative opportunity. FOMO-ing decisions are motivated by raw feelings, as opposed to the ideal decision, which involves strategic thinking and market research.
Traders' FOMO typically means they're dealing with a bull market, which means asset prices are rising. Veterans in crypto trading may use the same word to refer to those who are new to trading and who purchase assets as a result of the general excitement surrounding crypto.
The trading strategy of buying and holding in the cryptocurrency market is known as HODL. Those who adhere to the HODL strategy will accumulate cryptocurrency assets and hold on to them even when prices plunge. Naturally, they pursue a higher profit margin by turning the assets into long-term investments.
The HODL strategy is commonly used by traders who believe in the future of a particular cryptocurrency. Many who use the method are known as HODLers, but the term has no negative connotation like FOMO. Many that have owned Bitcoin for a long time may have had a positive experience in the past.
The idea of return on investment, or ROI, is not unique to cryptocurrency. Traders have used ROI calculations to find out how well their investments have done in every market. You can measure the return on any investment by subtracting the asset's original value from its current value and dividing the result by the initial cost.
Your return on investment (ROI) will demonstrate how much your investment has appreciated — or depreciated — over time. Although the word "return on investment" is frequently used, it isn't the most accurate. Other considerations to consider include market risk and asset liquidity.
In the crypto trading world, the phrase "Do Your Own Research" is self-explanatory. Traders are advised to perform analysis before making business decisions. It means that when buying crypto assets, a trader should not rely on pre-made advice. DYOR is also connected to concepts like Fundamental Analysis and strategy development.
As you may be aware, cryptocurrencies are subject to the same risks as other properties. As a result, a trader should assess the knowledge available to them and formulate a plan, taking into consideration the views of investors.
Know Your Customer is a series of guidelines designed to help companies better understand their customers' identities. In the crypto trading sense, KYC is concerned with cryptocurrency exchanges and trading platforms. Before authorising a customer to exchange, these services must check their identity and reputation. The KYC guidelines may vary depending on where the company is headquartered.
To avoid money laundering, crypto-based companies adhere to strict KYC guidelines. KYC isn't just for the crypto/investment environment. KYC rules are also used by general organisations to keep track of legality.
Due Diligence refers to the study and care that a responsible individual or company may perform before entering into a contract with another party. Let's say a trader/investor wants to buy an asset. Any rational actor needs to make sure the deal is free of any possible red flags.
DD will assist traders/investors in staying secure in their decisions. It gives you a greater understanding of the company behind the asset you want to invest in, depending on the situation. Until bidding, investors must weigh the costs and possible benefits.
Anti-Money Laundering (AML) refers to a set of rules that cryptocurrency and conventional trading platforms use to prevent money laundering. KYC, as previously stated, is one of the several components of the AML guidelines. AML is a collection of guidelines that makes it easier for regulators to understand how a trading platform might be manipulated.
Many regulators, for example, order the trading platform to review customer transactions and flag those that are suspicious. Companies can adopt different AML frameworks depending on their location and sector.
ATH and ATL
The peak value a particular commodity has achieved on a trading platform is referred to as an All-Time High. The ATH number is often referred to in pairs, rather than singularly. For eg, the current All-Time High of the BTC/USD pair is $57,125.93, which was set on February 2nd, 2021. When an asset hits its all-time high, almost anyone who bought it before will make a profit.
All-Time-Low, on the other hand, is at the opposite end of the continuum. The lowest value of a particular investment is referred to as the ATL. Traders who have invested in the asset, on the other hand, could be in deep trouble.
Fear, Uncertainty, and Doubt are not only correlated with cryptocurrency trading. It's a trading technique that involves disseminating knowledge about a specific asset or business. The theory is that this barrage of false information would instil fear, confusion, and doubt in other traders, causing them to make market decisions they would not have made otherwise.
To increase their profit, the trader who started the misinformation stream can sell the asset. The strategy is frowned upon, and traders are advised to double-check details about a business before making a decision.