Trading
The buying and selling of cryptocurrencies with the goal of generating profit from price movements. Crypto trading occurs on centralized exchanges (using order books), decentralized exchanges (using liquidity pools), and via derivatives platforms. Common strategies include spot trading (buying/selling actual assets), margin trading (using leverage), and derivatives trading (futures, perpetuals, options).
“A day trader might buy ETH at $3,000 on Binance, sell at $3,150 a few hours later, and repeat. A DeFi trader might arbitrage price differences between Uniswap and SushiSwap.”
Exchange
A platform where users can buy, sell, and trade cryptocurrencies. Centralized exchanges (CEX) are operated by companies that custody user funds and match orders, while decentralized exchanges (DEX) operate via smart contracts, allowing users to trade directly from their wallets.
Trading Pair
A combination of two assets that can be traded against each other on an exchange, denoted as BASE/QUOTE (e.g., BTC/USDT). The base currency is the asset being bought or sold, and the quote currency is the unit of measurement for the price. Trading pairs define what assets you can directly exchange without intermediary conversions.
Leverage
The use of borrowed capital to increase the size of a trading position beyond what the trader's own funds would allow. Leverage amplifies both gains and losses — a 10x leveraged position earns 10x the profit on favorable moves but also faces 10x the losses and can be fully liquidated by a relatively small adverse price movement.
Perpetual Futures (Perps)
A type of derivative contract that lets traders speculate on a cryptocurrency's price with leverage, without owning the underlying asset or dealing with expiry dates. Unlike traditional futures that expire, perpetual futures use a funding rate mechanism — periodic payments between long and short traders — to keep the contract price anchored to the spot price.