Whether you’re a passionate investor focusing on traditional markets or a day trader enjoying the volatile cryptocurrency space, there are some basic terms you should be aware of.
In this episode of the “Do You Speak Crypto?” series, we’re going to talk about some of the most fundamental terms that you may hear in all financial markets!
A market condition in which prices increase consistently.
In a bull market, the buyers (bulls) have control over the market and the market sentiment is quite positive (bullish). Positive news regarding regulation or adoption may start a bull market in the crypto space.
The opposite of a bull market: a market condition in which prices drop consistently.
In a bear market, the sellers (bears) are in control and the market sentiment may become very negative (bearish). Bear markets are known as the “Crypto Winter” in the cryptocurrency sphere.
A trend shows the overall price direction in the market.
We have 3 main market trends: upward, downward, and sideways. Bull markets and bear markets indicate an upward and downward trend respectively.
In a sideways trend, on the other hand, the bulls and bears are both equally in control and the price tends to move horizontally.
Technical Analysis (TA)
TA is based on the fact that future price movements can be predicted using the previous market trends and patterns. TA was first presented by Charles Dow, the creator of the Dow Theory in the late 1800s.
Additionally, Fundamental Analysis (FA) is another way to assess the intrinsic value of an asset which focuses more on the economic and underlying factors.
Volatility refers to the degree of market price movements over a specific period of time; The sharper the price fluctuations, the higher the volatility.
The crypto market, for instance, is considered a highly volatile market as prices may drop or increase significantly overnight.
In financial markets, a bubble is formed when the price of a specific asset increases well beyond its true value. The price declines to a more reasonable level once the bubble bursts.
Anti-Money Laundering (AML)
By using Money Laundering methods, criminals try to give a legitimate origin to their dirty money. So as the name suggests, AML legislation tries to prevent money laundering activities.
You may have heard about the Know Your Customer (KYC) process, now mandatory in most crypto exchanges. KYC helps crypto platforms, like DIFX Exchange, to know their customers better and identify potential money laundering activities.
Complete Your KYC on DIFX and Earn $20 Worth of DIFX Tokens Now!
Combating the Financing of Terrorism (CFT)
CFT refers to a set of rules and regulations that aim to restrict the transition of funds to dangerous organizations labeled as terrorists by governments.
It’s worth mentioning that the Financial Action Task Force (FATF) is the global watchdog for money laundering and terrorist financing.
Return On Investment (ROI)
ROI can gauge the profitability of an investment. It’s quite simple to use and can be calculated by dividing the net profit by the initial cost.
ROI does not consider the duration of an investment.
Annual Percentage Yield (APY)
APY represents the total interest you may earn if you hold your investment for one year.
APY is a standard measure that allows you to compare different investment opportunities and make a well-informed decision.
Didn’t find the terms you were looking for? No worries. Let us know in the comments so we can cover it for you in our next episode.
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