A world of rules, a freedom of thought.
The following 15 points allow beginners to quickly understand the knowledge of the cryptocurrency world.
Terminology explanations that you must know when entering the cryptocurrency world (a must-read for beginners). Friends who are just getting started can take a look at the terminology explanations in the cryptocurrency world.
1. What is fiat currency? Fiat currency is legal tender issued by the state and government, backed solely by government credit, such as the Renminbi, US Dollar, etc.
2. What does Token mean? Token is usually translated as 'certificate'. Token is one of the important concepts in blockchain, more commonly known as 'token', but in the professional 'chain circle', it is more accurately translated as 'certificate', representing a proof of rights on the blockchain, rather than currency. In traditional value systems, only things that can be recorded in the ledger can be exchanged for value and circulated. Therefore, accounting is the foundation of wealth creation. However, in the real world, the vast majority of things cannot be quantified, and the things that can be recorded in the ledger are extremely limited. But 'Token' can. The magic of this is that Token can record both physical assets and virtual digital assets in a digital way.
3. What does airdrop mean? Airdrop is a very popular marketing method in the current cryptocurrency world. In order to provide potential investors and cryptocurrency enthusiasts with information related to tokens, token teams frequently distribute unknown tokens to the accounts of participants in the cryptocurrency circle, and the quantity is proportional to the original token quantity. To receive more airdrops, one must purchase more tokens; this is a very effective marketing method.
4. What are candies? Various digital currencies that are just issued and are distributed for free to users during the ICO process. They are a way for the issuing party of virtual currency projects to create hype and promote the project itself.
5. What does breaking issue mean? The issue refers to the issuance price of digital currency, and breaking issue refers to a certain digital currency dropping below the issuance price.
6. What does private placement mean? It is a way to invest in cryptocurrency projects, and it is also the best way for cryptocurrency project founders to raise funds for platform operations. Private placement (Private Placement) is the opposite of public offering (Public offering). In simple terms, it is a private fundraising method, which refers to selling stocks (cryptocurrencies) to a small number of qualified investors without going through the public market to raise funds.
7. What does ICO mean? Initial Coin Offering, originating from the concept of Initial Public Offering (IPO) in the stock market, is the financing behavior of blockchain projects exchanging their self-issued virtual currencies for commonly used virtual currencies in the market.
8. What are the current trading platforms in the cryptocurrency circle? Binance, OKEx, Poloniex, Bittrex, Bitfinex, Kraken, Huobi Pro, Gate, etc. 1. Basic characteristics of virtual currency trading: (1) Trading time: 7*24 hours, no holidays. (2) No price limits: Virtual currency trading has no price limits, while stocks have price limits; for example, on May 28, Bitcoin's single-day increase exceeded 20%. (3) Trading unit: The minimum purchase is 0.0001 BTC (approximately 0.6 yuan), without the restriction of a minimum purchase of one lot (100 shares) like stocks. (4) Anytime trading: This means T+0; stocks are T+1 trading, meaning you can only sell the stock the next trading day after buying it on the same day. However, virtual currency is T+0 trading, meaning you can sell on the same day you buy. (5) No time limits on withdrawals and cashing out: You can withdraw and cash out anytime, with high liquidity.
9. Wallet Concept In simple terms, it is equivalent to a personal bank card. If you do not feel secure storing virtual currencies on trading platforms, you can store them in your personal wallet. Wallets come in various types, some correspond to single currencies, like a wallet that only holds EOS, while others can hold multiple currencies, like imToken and Tokenpocket (referred to as TP wallet), with the latter being more versatile.
10. Positive/Negative News Various kinds of news that are conducive to stimulating price increases are called positive news. Conversely, various kinds of news that cause price declines are referred to as negative news, such as trading platforms being hacked and losing cryptocurrencies, or governments imposing unfavorable regulations.
11. Public Chain / Private Chain / Consortium Chain Public chains refer to blockchains where anyone can participate in transactions and receive valid confirmations. Currently, most blockchain systems belong to public chains, such as Bitcoin and Ethereum. Public chains are suitable for scenarios where everyone can join and maintain the application, such as mutual insurance. Private chains refer to blockchains where the writing permissions are limited to a specific organization or certain entities. Reading permissions can be open or restricted to any extent. Developing enterprise-level applications based on private chains helps enterprises achieve on-chain business, and the immutable nature of on-chain information helps enhance the social credibility of the enterprise, increasing investor and investment institution confidence in the enterprise. Consortium chains refer to blockchains where the consensus mechanism is jointly controlled by several institutions. The credit mechanism within them is maintained by these institutions. The legality of all transactions must be confirmed by a majority or all institutions before being written into the blockchain as valid block records. Imagine in the financial industry, a consortium of several socially credible financial institutions forms a blockchain alliance, with each institution running a mining node, representing all participants in exercising the rights of consensus and maintaining the normal growth and operation of this blockchain.
12. Rebound / Consolidation / Pullback A rebound refers to a temporary price increase in a downward trend of digital currency prices, where the increase is less than the decrease. A pullback is the opposite, referring to a temporary price drop during an upward trend. Consolidation refers to a situation where the entire coin price remains relatively stable, with small fluctuations and no erratic movements. 1. Arbitrage refers to transferring the same coin from a lower-priced trading platform to a higher-priced one to profit from the price difference.
13. Leverage Leverage trading, as the name suggests, is using a small amount of capital to invest multiples of the original capital, expecting to obtain returns that are multiples of the fluctuations of the investment target, or potential losses, somewhat similar to gambling.
14. Basic Principles of Virtual Currency Transactions
(1) Market Order Trading: Transactions are executed at the market price at that time, which can guarantee that investors' buy and sell instructions are executed in a timely manner to a certain extent. However, at the same time, investors cannot predict the trading price before placing a market order, which carries a certain degree of uncertainty. Generally speaking, the more dramatic the market fluctuations, the greater the risk of uncertainty in the execution price of market orders.
(2) Limit Order Trading: Investors can set buy prices lower than the market price or sell prices higher than the market price. When the market price fluctuates to the set price, the transaction will occur. When the set price deviates significantly from the market price, it is prone to result in failure to execute.
(3) Basic principles of transactions: 'Price Priority, Time Priority' principle. A higher buying price is prioritized over a lower buying price, and a lower selling price is prioritized over a higher selling price. When the order prices are the same, the order with an earlier submission time is prioritized over the one submitted later.
15. Common professional terms in the transaction process explained in detail.
【Turnover Rate】 Refers to the frequency of buying and selling a particular coin in the market within a certain period, which is one of the main indicators to evaluate the liquidity of a particular coin.
【Market Order Trading】 Refers to buying and selling at the current market price. Market order trading has transaction priority; if you complete the transaction faster, you can use market order trading.
【Limit Order Trading】 Trading at a specified price for buying or selling is also called delegated trading or挂单交易.
【Wash Trading】 It is a trading technique used by dealers. The specific method involves opening accounts at multiple exchanges and trading between these exchanges in a back-and-forth manner to manipulate the coin price.
【Washing】 This is a method where dealers manipulate the coin price by intentionally depressing it. The specific method is to first raise the coin price and then profit by selling. During this period, the main force often intentionally places large sell orders to pressure the market, forcing low-priced buyers to sell their digital currencies to relieve the upward pressure, making it easier to raise the coin price.
【Market Support】 When prices are sluggish and the popularity of the cryptocurrency is low, large holders buy large amounts of the coin to prevent further price declines.
【Bull Market】 Refers to a market trend where prices are rising, presenting a sustained upward trend with an optimistic outlook. (In the cryptocurrency world, the rise of BTC leads other mainstream coins, and the rise of altcoins.)
【Bear Market】 It is the opposite of a bull market, referring to a market trend that continues to decline, with market sentiment being low and showing a prolonged downward phenomenon. (What you are currently experiencing is a bear market. During this stage, the most important thing is to survive. Then comes further actions like hoarding coins and bottom-fishing.)
【Monkey Market】 I believe many people do not understand this; it exists in the stock market. Why is it called monkey market? Because monkeys like to jump around, which corresponds to our market jumping around. In the monkey market phase, it is difficult to grasp the trend. (It may be that mainstream coins rise today, and fall tomorrow, or some altcoins rise while others plunge.)
【Main Uptrend】 Originating from wave theory, this refers to the wave during a price increase that lasts the longest. This is also a common occurrence in a bull market; if you catch the main uptrend, you can earn a lot. Conversely, the downward price trend is sometimes called the 'main downtrend.'
【Downward Trend】 The overall market trend is downward, but the price often rises for two days and falls for one, always giving people hope, yet continuously disappointing them.
【Waterfall】 Refers to a sudden significant drop in market prices, with several dramatic bearish candlesticks appearing in a short time, resembling a waterfall, flowing straight down, causing pain to the viewers.
【Blowout】 The market is influenced by negative factors and remains low for a long time. During this period, the market trend is very suppressed, and when the negative factors are exhausted or removed, the market will show explosive growth.
【Washing】 The dealer or project party, along with financially strong consortiums, manipulates the market through capital, causing price fluctuations to scare away hesitant investors, achieving the goal of profiting immensely.
【Accumulating】 Generally done through washing, shaking out the weak hands, then the dealer will take over the coins sold by the weak hands, allowing them to hold more chips to achieve control of the market (generally, accumulation will take place at low prices).
【Market Control】 Very simple, I have a lot of money (the proportion of my coins in circulation is large), and I can manipulate the market to rise or fall easily. The goal is straightforward: make more money and trap more investors. 【Harvesting】 One group of speculative investors loses money and exits the market, while another group of newcomers enters the market, similar to harvesting crops repeatedly. The happiest are the dealers.
【Fake Line】 The dealer uses candlesticks to create upward or downward trends, prompting us to buy or sell, achieving their goal of harvesting profits.
【Positive News】 Also known as good news. Mainly refers to good news. In most people's eyes, positive news will definitely lead to a rise, but this is not the case; positive and negative news do not have a proportional relationship with price increases, they only have a certain influence that can stimulate the market.
【Negative News】 Also refers to unfavorable news for the market. However, there is a saying in the market: when negative news is exhausted, it turns into positive news.
【Inducing Long】 When the coin price has been consolidating for a long time with a high possibility of decline, and most shorts have sold their virtual currency, suddenly the shorts raise the price, inducing the longs to believe that the price will rise, causing them to buy in, only for the shorts to pressure the price and trap the longs. 【Inducing Short】 After the longs buy virtual currency, they artificially depress the price, making the shorts think the price will drop, prompting them to sell, resulting in falling into the trap set by the longs.
【Position】 This is simple, it is the ratio of your account funds to the funds you use to buy coins.
【Full Position】 All account funds are converted into coins. What you often say 'full investment' or 'all in' refers to full position.
【Replenishing Position】 For example, if you hold BTC and it drops, you buy some more BTC to lower your average cost.
【Increasing Position】 If you hold BTC and are optimistic about BTC's development, then while BTC is rising, you buy some more BTC. 【Establishing Position】 Also called opening position. Refers to buying a certain quantity of cryptocurrencies with account funds.
【Reduce Position】 It is expected that there will be risks in the future market, sell part of the cryptocurrencies held.
【Locking Position】 Those who do futures leverage should know. It's simple, if you do EOS futures leverage and you buy a long position of 10,000, then you open a short position of 10,000. Think carefully about your position. 【Empty Position】 Not trading anymore, just watching. In the cryptocurrency circle, this can be understood as having only USDT in your account and no other coins. 【Light Position】 The funds used to buy coins account for a small proportion of total funds. 【Heavy Position】 The funds used to buy coins account for a large proportion of total funds. 【Half Position】 The funds used to buy coins account for half of total funds. 【Clearing Position】 Not playing anymore, selling all coins, preparing for an empty position.
【Take Profit】 After obtaining a certain profit, sell all virtual currencies to preserve the gains.
【Stop Loss】 Once losses reach a certain level, sell all held virtual currencies to prevent further loss expansion. 【Sideways】 The market fluctuates little, with price changes staying within a specific range.
【Rebound】 The coin price, during a downward trend, receives technical support or capital intervention, causing the market to shift from decline to rise.
【Reversal】 The coin price falls to the bottom, reaches a point where it cannot drop further, and shifts from a downward trend to an upward trend. Commonly seen as a 'V-shaped reversal.' A rebound is the basis of a reversal, and the magnitude of the reversal is much greater than that of the rebound. 【Arbitrage】 Simply put, look for price differences between platforms and earn from the price differences. Arbitrage requires attention to the speed of currency transfers, as sometimes the speed of transfers can affect your profits.
【OTC Trading】 Many platforms also call it fiat currency trading. The platform acts as an intermediary; merchants or individuals can directly trade with RMB to buy or sell mainstream coins or USDT. The trading is similar to certain e-commerce platforms (you know what I mean). 【Cutting Losses】 A euphemism for 'liquidation'. Some of you often do this, selling even when it drops, fearing it will drop further.
【Stuck】 You buy a coin, it drops, and you can't bring yourself to sell, congratulations, that is called being stuck.
【Breaking Even】 You bought a coin, it dropped, and you felt sad. After a while, it goes up again, and you're happy because you broke even.
【Missing Out】 When the market is bad, you buy. When the market rises, you hesitate. A perfect miss, this is called missing out.
【Roller Coaster】 You bought a coin and it rose; you are excited and brag to your friends, but after a few days, it drops again. You feel like you are on a roller coaster, just a thrill, and then it's over.
【Hoarding】 If you are optimistic about the future development of this coin and want to make tenfold, hundredfold, or thousandfold profits to achieve financial freedom, you will buy a lot of this coin and hoard it.
【Going Long】 Also called 'Long', the buyer believes the coin price will rise in the future, buys the coin, and sells it at a high price after the price rises.
【Short Selling】 Also known as 'short', it is the opposite of going long. The seller believes the coin price will drop in the future and sells the coins held (or borrowed from the trading platform), intending to buy them back at a lower price for profit.
【Mining】 The process of using computers, smartphones, and other devices to run calculation programs to earn digital currency. Note: Mining can shorten the lifespan of the equipment.
【ICO】 Initial Coin Offering, originating from the concept of Initial Public Offering (IPO) in the stock market, is the financing behavior of blockchain projects exchanging their self-issued virtual currencies for commonly used virtual currencies in the market.
Welcome to follow Rong Rong, where you can learn and communicate in real-time, and also clearly understand the market direction and strategies. No matter what style the market is, knowing in advance gives you time to master it better!!!
The team still has positions, hop on board quickly, and become a dealer and a winner.
