Crypto Scalping Glossary
Plain-language definitions of the terms you will meet across BestScalping. Use Ctrl/Cmd+F to jump to any term. Entries link to full articles where available.
Trading Styles
Scalping
A trading approach that targets many small price moves, each lasting seconds to a few minutes. The goal is not one large win but consistent small ones, with strict loss control. The high frequency of decisions demands discipline and fast execution. → What is scalping
Day trading
Opening and closing all positions within the same trading day, targeting 0.5%–3% moves. Fewer decisions than scalping but still requires active monitoring. Positions do not survive overnight.
Swing trading
Holding positions for days or weeks to capture larger directional moves (3%–10%+). Requires patience and the ability to tolerate significant intraday fluctuations. Much lower time commitment per day than scalping. → Scalping vs day trading vs swing
Timeframe
The period each candle on a chart represents — 1 minute, 5 minutes, 1 hour, etc. Scalpers primarily use 1-minute, 3-minute, and 5-minute charts for entries, with higher timeframes (15m, 1h) for context. → Best timeframes for scalping
Order Types & Execution
Market order
An instruction to buy or sell immediately at the best available price. Guarantees execution but not price. Expensive in fast-moving or thin markets due to slippage. Uses taker fees. → Order types explained
Limit order
An instruction to buy or sell at a specified price or better. Rests in the order book until matched. Cheaper than market orders (maker fees, often lower or even negative). No guarantee of fill if price never reaches the level. → Order types explained
Stop-loss
An order that triggers an exit when price reaches a specified adverse level. Essential for every trade — it defines the maximum loss if the trade is wrong. A stop-market guarantees execution; a stop-limit controls price but risks non-fill. → Risk and sizing
Stop-limit order
A two-stage order: a stop triggers the order, which then becomes a limit order at a specified price. Offers price control but risks non-fill if price gaps through the limit level. Generally not recommended for stop-losses in fast markets.
Take-profit
A limit order placed at a target price above (for longs) or below (for shorts) the entry. Automatically closes the position when reached. Ensures the planned gain is captured without requiring manual action.
Maker
A participant who places a resting limit order that adds liquidity to the order book. Makers typically pay lower fees — often 0.01%–0.02% on major exchanges — because they improve market quality. Some exchanges offer negative maker fees (rebates).
Taker
A participant who places an order that immediately matches against a resting order, removing liquidity. Takers pay higher fees (typically 0.04%–0.06%). Market orders are always taker; aggressive limit orders that cross the spread are also taker. → Order types explained
Post-only
A limit order flag that cancels the order if it would be executed as a taker (i.e., it would immediately cross the spread). Guarantees you always pay maker fees.
Reduce-only
A futures order flag that only reduces or closes an existing position — it cannot open a new one. Always use on stop-losses and take-profits in futures to prevent accidental position increases.
Slippage
The difference between the expected execution price and the actual price received. Occurs when the order book is thin or the position size is large relative to available liquidity. More pronounced with market orders.
Spread
The difference between the best bid (highest buyer price) and the best ask (lowest seller price). Narrower spreads indicate higher liquidity and lower implicit transaction cost. On liquid BTC perps, the spread is often less than 1 basis point.
Market Structure & Price Action
Bid
The highest price a buyer is currently willing to pay. Resting bids are visible in the order book below the last traded price. A market sell order executes against the best bid.
Ask (Offer)
The lowest price a seller is currently willing to accept. Resting asks are visible above the last traded price. A market buy order executes against the best ask.
Support
A price level where buying interest has historically been strong enough to stop or reverse a downward move. Identified by previous lows, round numbers, or high-volume price zones. → Candlestick context
Resistance
A price level where selling interest has historically been strong enough to stop or reverse an upward move. Previous highs, round numbers, and VWAP are common resistance levels.
Liquidity sweep
A sharp move that pushes price through an obvious support or resistance level — triggering resting stop orders and liquidations — before reversing. Also called a stop hunt or stop run. The sweep "cleans out" the stops, then price reverses when the forced selling is exhausted. → Order book and DOM
Stop hunt
See liquidity sweep. A move specifically designed to trigger clusters of stop-loss orders before the market reverses.
Range
A price corridor where neither buyers nor sellers are in clear control. Price oscillates between a defined high (resistance) and a defined low (support). Ranges precede directional moves and are tradeable in themselves via range fading.
Breakout
When price closes decisively beyond a defined support or resistance level, potentially beginning a new directional move. The quality of a breakout is confirmed by rising open interest and volume.
Trend pullback
A temporary counter-trend move within a broader directional trend. Pullbacks to moving averages or VWAP are common entry points for trend-continuation trades.
Order flow
The stream of actual trades being executed in the market — who is buying aggressively and who is selling. Distinct from the order book (which shows pending orders). Order flow reveals intent through action. → Order book and DOM
CVD (Cumulative Volume Delta)
The running total of aggressive buyer volume minus aggressive seller volume since a reference point. CVD rising with rising price = healthy trend. CVD diverging from price = momentum weakening. One of the most useful real-time signals for scalpers. → Order book and DOM
Derivatives & Perpetuals
Futures contract
A derivative agreement to buy or sell an asset at a specified price on or before a specified date. Crypto futures allow traders to go long (profit from rising prices) or short (profit from falling prices) with leverage.
Perpetual futures (perp)
A futures contract with no expiry date. Keeps its price close to spot through the funding rate mechanism. The most popular instrument for crypto scalpers due to continuous liquidity and easy shorting. → Perpetual futures
Dated futures
A futures contract with a fixed expiry date (weekly, quarterly). Converges to spot price at expiry. Used more often by institutional traders and options hedgers than by scalpers.
Funding rate
A periodic payment exchanged between long and short holders of a perpetual futures position. Positive funding = longs pay shorts (market is bullish-crowded). Negative = shorts pay longs. Resets every 8 hours on most exchanges. A key sentiment indicator. → Funding rates explained
Open interest
The total number of active, unsettled futures contracts. Rising OI + rising price = new buying conviction. Rising OI + falling price = new short conviction. Falling OI = positions closing. → Open interest explained
Long
A position that profits from rising prices. When you "go long," you buy the instrument expecting it to increase in value.
Short
A position that profits from falling prices. You sell an instrument you do not own (borrowing it via the exchange's margin system), expecting to buy it back cheaper later.
Liquidation
The forced closure of a leveraged position when its losses have consumed the allocated margin. Executed by the exchange automatically at market price. Large clusters of liquidations at the same level create cascades. → Liquidation cascades
Liquidation cascade
A chain reaction where forced closures drive price further, triggering additional liquidations in the same direction. Creates sharp, sudden moves that often reverse once the cascade exhausts itself. → Liquidation cascades
Mark price
The price used by exchanges to calculate unrealised P&L and trigger liquidations. Derived from multiple exchange price feeds rather than the last trade price — prevents manipulation via thin-market trades.
Index price
The reference spot price calculated from multiple exchanges, used as the basis for mark price and funding rate calculations. Ensures perpetuals stay anchored to the real underlying asset price.
Leverage
The multiplier that allows controlling a position larger than the deposited margin. 10× leverage = $1,000 deposit controls a $10,000 position. Amplifies both gains and losses equally. → Leverage explained
Margin
The capital deposited as collateral to open and maintain a leveraged position. Two types: initial margin (required to open) and maintenance margin (minimum to keep the position open without liquidation).
Initial margin
The minimum amount required to open a leveraged position. Expressed as a percentage of position size (inverse of maximum leverage). At 10× leverage, initial margin = 10% of position size.
Maintenance margin
The minimum margin level required to keep a position open. If losses reduce the margin below this level, liquidation is triggered. Always set wider stop-losses than the maintenance margin level.
Isolated margin
A margin mode where only the specific amount allocated to a trade is at risk. A position can be liquidated without affecting the rest of the account. Recommended for scalping.
Cross margin
A margin mode where the entire account balance backs all open positions. Provides more buffer against liquidation but risks the whole account if one position goes badly wrong.
Basis
The price difference between a futures contract and the underlying spot price. Positive basis = futures trading above spot (contango). Negative basis = futures below spot (backwardation).
Options
Call option
The right (not obligation) to buy an asset at a specified price (the strike) before or at a specified date (expiry). A call gains value when the underlying rises. Buyers pay a premium; maximum loss is the premium paid. → Options basics
Put option
The right (not obligation) to sell an asset at the strike price before expiry. A put gains value when the underlying falls. Used to hedge long positions or to express a bearish view. → Options basics
Premium
The price paid to buy an option. Represents the option's total value: intrinsic value (how deep in-the-money it is) plus time value (remaining time and implied volatility).
Strike price
The fixed price at which an option contract can be exercised. A call with a strike of $85,000 gives the holder the right to buy BTC at $85,000 regardless of market price.
Expiry
The date and time after which an option contract becomes worthless if unexercised. On Deribit, BTC and ETH options expire daily, weekly, monthly, and quarterly. Time decay (theta) accelerates as expiry approaches.
Implied volatility (IV)
The market's forward-looking expectation of volatility embedded in option prices. High IV = options are expensive (market expects large moves). Low IV = options are cheap (market expects calm). → Implied volatility and skew
Delta (Δ)
How much an option's price changes for a $1 move in the underlying. A call with delta 0.5 gains $0.50 when BTC rises $1. Also a rough probability that the option expires in-the-money. → The Greeks explained
Gamma (Γ)
How fast delta changes as the underlying moves. Highest for at-the-money options near expiry. High gamma means delta changes rapidly — relevant because market makers must adjust their delta hedges frequently, creating perp market flow. → The Greeks explained
Theta
Time decay — how much an option loses in value each day, all else equal. Always negative for option buyers (they lose time value daily) and positive for sellers. Accelerates sharply in the final 30 days before expiry. → The Greeks explained
Vega (ν)
How much an option's price changes when implied volatility moves by 1 percentage point. Option buyers are long vega (they benefit from IV rising); sellers are short vega. → The Greeks explained
GEX (Gamma Exposure)
The aggregate gamma exposure of options market makers across all open contracts. Positive GEX = market makers buy dips and sell rallies (volatility-dampening). Negative GEX = they buy rallies and sell dips (volatility-amplifying). A publicly-tracked market structure indicator. → The Greeks explained
Max pain
The strike price at which the greatest number of options contracts expire worthless — causing maximum financial loss to option buyers. Near expiry, gamma hedging can pull price toward this level. → Max pain
Vol skew
The difference in implied volatility across different strike prices for the same expiry. Typically, out-of-the-money puts are more expensive (higher IV) than equivalent calls — reflecting demand for downside protection. Extreme skew = the market fears a sharp directional move. → IV and skew
Technical Indicators
EMA (Exponential Moving Average)
A moving average that gives more weight to recent prices, making it more responsive than a simple moving average. Scalpers typically use the 9 and 21 EMA on short timeframes for trend and pullback entries. → EMA strategies
SMA (Simple Moving Average)
A moving average that weights all periods equally. Slower than EMA, less responsive to recent price changes. The 20-period SMA is the middle band of Bollinger Bands.
VWAP (Volume Weighted Average Price)
The average price at which an asset has traded during the session, weighted by volume at each price. Resets daily. Price above VWAP = buyers in control. Price below = sellers. A key intraday reference for scalpers. → VWAP for scalping
RSI (Relative Strength Index)
A momentum oscillator (0–100) measuring the speed of recent price gains vs losses. Above 70 = overbought. Below 30 = oversold. Most useful when showing divergence with price. → RSI divergence
RSI divergence
When price makes a new extreme (higher high or lower low) but RSI does not. Signals weakening momentum and potential reversal. Most reliable at key support/resistance levels with candlestick confirmation. → RSI divergence
Bollinger Bands
Three bands: a 20-period SMA (middle) plus/minus 2 standard deviations (upper and lower). When bands narrow sharply (the "squeeze"), volatility has compressed — a large breakout move is likely approaching. → Bollinger Bands
Bollinger Squeeze
The condition when Bollinger Bands narrow to an extreme, indicating compressed volatility. Reliably precedes a large directional breakout. Trade the breakout direction, not the prediction. → Bollinger Bands
ATR (Average True Range)
Measures average price volatility over a period. Used to set stop-losses proportional to current market conditions ("stop at 1× ATR") and to gauge whether a move is large relative to normal fluctuation. → ATR indicator
Volume profile
A chart overlay showing how much volume traded at each price level over a specified period. High-volume nodes act as support/resistance. Low-volume zones are where price tends to move quickly. → Volume profile
OBI (Order Book Imbalance)
The ratio of bid-side volume to ask-side volume within a defined depth range. High OBI = bids dominate = mild short-term bullish lean. Meaningful only in combination with trade flow and price reaction.
Risk Management
Risk/Reward ratio (R/R)
The ratio between the maximum planned loss (stop-loss distance) and the planned gain (take-profit distance). A 1:2 R/R means risking $1 to potentially make $2. R/R and win rate together determine whether a strategy is profitable. → Win rate vs R/R
Win rate
The percentage of trades that close profitably. A high win rate does not guarantee profitability — it must be evaluated alongside R/R. A 40% win rate can be profitable with 1:2 R/R. → Win rate vs R/R
Expectancy
The average amount gained or lost per trade over many trades. Expectancy = (Win rate × Avg win) − (Loss rate × Avg loss). Must be positive (after fees) for a strategy to be viable long-term. → Win rate vs R/R
Drawdown
The decline from a peak account value to the lowest subsequent point before a new high is reached. Maximum drawdown measures the worst peak-to-trough loss in a period. A key measure of strategy risk.
Position sizing
Calculating how many contracts or units to trade so that a losing trade risks only a defined percentage of the account. The formula: Position size = Risk amount / Stop distance. → Risk and sizing
Portfolio heat
The total risk exposure across all simultaneously open positions. Keeping total heat below 4–6% of account prevents a correlated move from causing catastrophic loss. → Risk and sizing
Revenge trading
Entering trades to "get back" losses after a losing session. Driven by emotion rather than edge. Almost universally makes drawdowns worse. The fix: stop trading for the day after 3 consecutive losses. → Common mistakes
Venues & Infrastructure
CEX (Centralised Exchange)
A trading platform operated by a company that holds user funds in custody. Fast, liquid, and regulated in most jurisdictions. Major crypto CEX venues: Binance, Bybit, OKX, Deribit.
DEX (Decentralised Exchange)
A trading protocol that runs on blockchain smart contracts without a central operator. Users retain custody of funds. Growing liquidity (notably Hyperliquid for perpetuals), but typically slower and more complex than CEX.
Order book
The live, ranked list of all pending buy (bid) and sell (ask) orders on an exchange. Visible depth shows where supply and demand are concentrated. The primary microstructure tool for scalpers. → Order book and DOM
DOM (Depth of Market)
A condensed view of the order book showing the best 10–20 price levels on each side with their cumulative volume. Gives a real-time snapshot of supply/demand at current price. → Order book and DOM
Maker/taker fee structure
The fee model where orders that add liquidity (makers, resting limit orders) pay less — or receive rebates — while orders that remove liquidity (takers, market orders) pay more. Critical for scalping profitability.
Latency
The time delay between sending an order and it being processed by the exchange. In scalping, low latency matters — but retail traders on major exchanges with a normal internet connection can execute competitively without co-location.
WebSocket
A persistent connection protocol used for real-time market data feeds. Orders, trades, and order book updates are delivered via WebSocket streams on all major crypto exchanges. Essential for programmatic scalping.
Glossary is continuously expanded. If a term is missing, check the relevant full article or use the search bar above.
This content is educational only. Not financial advice. See disclaimer.