[Glossary] Spot Trading Terms

CryptoKas

Below is a detailed glossary of terms you’ll encounter in Spot Trading discussions. Definitions are clear and practical—perfect for anyone navigating the cash markets.

Market Basics

Spot Market: A marketplace where assets are bought or sold for immediate settlement—think “cash” trades, not contracts.
Trading Pair: Two assets you can trade against each other (e.g., BTC/USD or ETH/USDT).
Base Asset / Quote Asset: In BTC/USD, BTC is the base asset (what you’re buying/selling) and USD is the quote asset (what you pay/receive).
Tick Size: The smallest price increment you can quote (e.g., $0.01).
Lot Size: The minimum quantity you must buy or sell (e.g., 0.001 BTC).

Order Types

Market Order: Executes immediately at the best available price—fast but may suffer slippage.
Limit Order: Sets a maximum buy or minimum sell price—you only trade if the market reaches your level.
Stop-Loss Order: Converts to a market order once price hits your stop level—used to cap losses.
Take-Profit Order: Automatically sells when price reaches your target—locks in gains.
Post-Only / Maker Order: Ensures your limit order adds liquidity (sits on the book) rather than taking it.

Trading Strategies

Scalping: Fast, small-profit trades held for seconds or minutes—requires tight spreads and quick execution.
Swing Trading: Capturing medium-term moves over days to weeks, using support/resistance and momentum.
Position Trading: Longer-term holds based on fundamental or macro views—weeks to months.
Range Trading: Buying at established support and selling at resistance within a horizontal channel.
Dollar-Cost Averaging (DCA): Investing a fixed amount on a regular schedule to smooth entry prices.

Performance Metrics

P&L (Profit & Loss): Your net gain or loss from a trade or series of trades.
ROI (Return on Investment): Percentage gain or loss relative to capital deployed.
Win Rate: Ratio of winning trades to total trades, often expressed as a percentage.
Risk-Reward Ratio: Potential profit vs. potential loss on a trade (e.g., 2:1 means you aim to make $2 for every $1 risked).
Average Trade Duration: The typical time you hold positions, from entry to exit.

Tools & Platforms

Order Book: Live list of buy and sell orders—helps you see current liquidity and depth.
Trading Interface: The platform screen where you chart, place orders, and monitor fills.
Mobile App: Hand-held access to place trades and track balances on the go.
Portfolio Tracker: Aggregates your spot balances, trade history, and P&L in one view.
Transaction History: Record of all your executed trades and order statuses.

️ Risk & Cost Considerations

Slippage: Difference between expected price and actual fill, especially in fast markets.
Trading Fees: Charges by exchanges per trade—can be a percentage of volume or fixed.
Withdrawal Fees: Costs to transfer assets off an exchange to your wallet.
Spread: Gap between the best bid and best ask; wider spreads increase implicit cost.
Liquidity Risk: The danger of not finding a buyer or seller at your desired price, leading to larger slippage.

Feel free to pin this thread as your go-to reference. If you spot any missing terms or want deeper examples, drop a comment below!*