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Basis Trading: The practice of buying and selling futures contracts based on the difference in price between the spot price and the futures price.
Basis: The difference between an asset's spot price and the futures price.
Bid-Ask Spread: The difference between the highest price a buyer is willing to pay for an asset (bid) and the lowest price a seller is willing to accept for the same asset (ask).
Closing Price: The final price of an asset at the end of a trading session. This price is used to calculate the profit or loss for the day.
Collateralization: The practice of using assets as collateral for a derivatives contract in order to protect against default.
Decentralized Exchange (DEX): A type of cryptocurrency exchange that operates on a blockchain and allows for peer-to-peer trading without the need for a central authority.
Derivatives: Financial instruments based on an underlying asset, such as a currency, commodity, or stock. They allow investors to speculate on the future price movements of these assets or protect against potential price fluctuations.
Fills: The process of executing a trade at a specific price. A trader can either receive a full fill (the entire order is executed at the desired price) or a partial fill (only a portion of the order is executed at the desired price).
Floor Price: Floor price refers to the minimum price at which an NFT can be sold. The floor price is usually determined based on the demand for the NFT, the perceived value of the NFT, and the costs associated with creating and selling the NFT.
Forced Liquidation: The sale of assets in order to meet a margin call or other financial obligation.
Funding Rate: The rate at which the perpetual contract holder pays or receives funds to maintain the correct value of the contract.
Futures Contract: A futures contract is a standardized financial agreement between two parties to buy or sell a specific asset, such as a commodity, currency, stock index, or cryptocurrency, at a predetermined price on a specified future date.
Unlike forward contracts, which are customized and traded over-the-counter, futures contracts are standardized and traded on regulated exchanges.
Futures Rollover: The process of closing out an existing futures contract and opening a new one at the next expiration date.
Gas fee: The fee paid to the Ethereum network to execute a transaction, such as placing an order or trading an NFT.
Index Futures: Futures contracts that track the performance of a specific index, such as the S&P 500.
Index Price: The reference point or benchmark used to determine the value of a derivative or futures contract.
Initial Margin: The amount of funds that are required to be deposited in order to open a position in a perpetual futures contract.
Leverage: The ratio of borrowed funds to the trader's own funds used in a margin trade.
Leveraged Funding: A type of funding that involves using leverage or borrowing to increase the size of a trade or contract.
Limit Order: An order to buy or sell an asset at a specific price or better.
Liquidation Price: The price at which a position is liquidated is typically lower than the mark price to account for slippage and other costs.
Liquidation: The process of selling off assets in order to pay off debts or other obligations. Liquidity mining: The process of providing liquidity to a decentralized exchange for rewards, such as tokens or governance rights.
Liquidity Pool: A pool of assets that are used to provide liquidity to an AMM or a decentralized exchange.
Liquidity Provider: A participant in a market who provides liquidity by placing limit orders on both the buy and sell side of an order book.
Long Position: A trading strategy where a trader purchases shares or contracts of an asset in the expectation that the price will increase, allowing them to sell the shares or contracts at a higher price and make a profit.
Maker Order: An order placed on the order book that adds liquidity to the market by offering to buy or sell at a specific price.
Margin Call: A demand by a broker or exchange for a trader to add more funds to their account to meet minimum margin requirements.
Margin Funding: A type of funding that involves using collateral, such as cash or securities, to back a trade or contract.
Margin Trading: The ability to trade with leverage, using borrowed funds to increase potential profits or losses.
Mark Price: The reference price used to determine the value of a futures contract and whether a margin call is triggered.
NFT (Non-Fungible Token): A digital asset that represents ownership of a unique item or piece of content, such as a digital art piece or collectible.
Open Interest: The number of outstanding futures or options contracts that have not been settled or closed.
Order Book: A list of buy and sell orders for an asset, typically used in centralized and decentralized exchanges.
Order Cancellation: The process of canceling an order that has not yet been filled.
Order Fill: The process of executing an order at the specified price and quantity.
Order Matching Algorithm: The algorithm used to match orders on the order book, such as price-time priority or pro-rata matching.
Order Matching: The process of matching buy and sell orders at the best available price.
Perpetual DEX: A decentralized exchange that offers perpetual trading of assets with no contract expiration date.
Perpetual Funding: A type of funding used to fund perpetual futures contracts which do not have a fixed expiration date and require continuous funding to keep the position open.
Perpetual Swap: A derivative contract with no expiration date, allowing for perpetual asset trading.
Position Sizing: The process of determining the size of a trade based on the amount of capital allocated to it.
Settlements: Settling a contract by paying or receiving the difference between the contract price and the current market price.
Short Position: A trading strategy where a trader borrows shares or contracts of an asset and sells them in the expectation that the price will decline, allowing them to purchase the shares or contracts at a lower price and return them to the lender while making a profit.
Slippage: The difference between the expected price of a trade and the actual executed price, often caused by low liquidity.
Stop Order: An order to buy or sell an asset when the price reaches a certain level, typically used as a risk management tool.
Synthetic Assets: A type of derivative that allows the trader to gain exposure to an asset without actually owning it.
Taker Order: An order executed by taking liquidity from the order book, typically at a slightly worse price than the best available bid or ask.
Trade Execution: Buying or selling a derivative contract on a trading platform.
Trade Volume: The total number of shares or contracts traded during a specific period.
Underlying Asset: The asset that a derivative contract is based on, such as a stock, commodity, Cryptocurrency, or NFT.
Volatility: The degree of uncertainty or risk associated with the value of an underlying asset.