Crypto trading glossary
Plain definitions of the terms used across this site, from ATR to VWAP, each linked to the strategy that uses it.
ATR (average true range)
The typical size of a candle over recent candles, including gaps. Used to size stop buffers and to judge whether a range is tight, so the same rules work on calm and volatile coins.
Covered in Managing a setup: stops, targets and the time limit
Bollinger bands
A 20-candle moving average (the middle band) with bands two standard deviations above and below it. A close outside a band means price is stretched compared with its recent average.
Covered in Bollinger band reversion: buying the snap back inside
Break of structure (BOS)
A candle that closes above the last swing high. It shows buyers taking out a level that capped price before.
Covered in Fair value gap retest: buying the pullback into an imbalance
Breakout
A close beyond a level or range that has held price before, ideally on higher volume. A breakout that falls back inside the range is called a fakeout.
Covered in Breakout trading: when to trust a break and when to run
Change of character (CHoCH)
A break of structure that happens while the structure was down: the first sign that a downtrend may be turning.
Covered in SMC sweep and change of character: trading the turn
Divergence (RSI)
When price makes a lower low but RSI makes a higher low (bullish), or the mirror at highs. It suggests momentum is fading before price turns.
Covered in RSI divergence: when a new low comes with less selling
Dollar-cost averaging (DCA)
Buying a fixed amount on a fixed schedule, whatever the price, so the average cost evens out over time.
Covered in Dollar-cost averaging: the boring strategy that works
Donchian channel
Lines at the highest high and lowest low of the last 20 candles. A close above the upper line is a new 20-candle high.
EMA (exponential moving average)
A moving average that weights recent candles more. The 20 EMA follows price closely; the 50 EMA is slower. The 20 above the 50 is a common sign of an uptrend.
Covered in Trend pullback: buying the dip to the 20 EMA
Engulfing candle
A candle whose body covers the previous candle's body. A bullish engulfing is a green candle that opens at or below the previous red close and closes above its open.
Covered in Bullish engulfing at a level: a candle pattern with context
Fair value gap (FVG)
Three candles where the third candle's low is above the first candle's high. The untraded space between them is the gap, which price often comes back to.
Covered in Fair value gap retest: buying the pullback into an imbalance
Fakeout
A break above or below a level that quickly fails and closes back inside the range. Waiting for a candle close filters out many of them.
Covered in Breakout trading: when to trust a break and when to run
Liquidity (sweep)
In smart money concepts, the stop orders resting beyond obvious swing highs and lows. A sweep is a wick through those levels that closes back inside.
Covered in SMC sweep and change of character: trading the turn
Market structure
Up when the last two swing highs and lows are both rising, down when both are falling, mixed otherwise.
Covered in SMC sweep and change of character: trading the turn
Opening range
The high and low of the first 30 minutes after a major market opens (Tokyo, London or New York). A first close outside it is a common momentum signal.
Covered in Opening range breakout: trading the Tokyo, London and New York opens
Order block
The last red candle before a break of structure. Traders watch it as a zone where buyers may step in again when price returns.
Covered in Order block retest: buying the return to where the move began
Point of control (POC)
The price with the most volume traded in a volume profile. It acts like the market's centre of gravity.
Covered in POC reclaim: buying back above the busiest price in an uptrend
Position size
How much you buy, worked out from your stop: (account × risk %) ÷ (entry − stop). It keeps the loss at the stop to a fixed slice of the account.
Covered in What to check before any crypto trade
R (R-multiple)
The amount risked between entry and stop. A trade that makes twice what it risked is +2R; one stopped out is −1R.
Covered in Managing a setup: stops, targets and the time limit
RSI (relative strength index)
A 0–100 momentum reading from recent gains and losses. Below 30 is often called oversold, above 70 overbought.
Covered in Range fade: buying the false break of the 24-hour low
Squeeze
A stretch of small candles in a tight range, often measured as a few ATR tall. Volatility tends to expand after it.
Covered in Squeeze breakout: trading the break out of a tight range
Stop-loss
The price where a trade is closed because the idea behind it has failed. On this site it sits just past the structure, plus a 0.2 ATR buffer.
Covered in Managing a setup: stops, targets and the time limit
Swing high / swing low
A candle whose high is above the three candles on each side (a swing low is the mirror). It is only known three candles later.
Covered in SMC sweep and change of character: trading the turn
Value area (VAH and VAL)
The price band holding 70% of the volume in a volume profile. VAH is its top and VAL its bottom.
Covered in Value area fade: buying a failed move below value
Volume profile
A sideways histogram of how much volume traded at each price over a period, here the last 96 candles.
Covered in Value area fade: buying a failed move below value
VWAP (volume-weighted average price)
The average price paid during the day, weighted by volume, reset each day. Price above it means buyers are in control for the session.
Covered in VWAP reclaim: buying back above the day's average price