Trading glossary
New to trading or need a refresher? Explore common trading terms you’ll encounter when using MetaMask’s trading features. This list will be updated as new features and terms are introduced.
Market basics
| Term | Definition |
|---|---|
| Spot price | The current market price of an asset for immediate execution |
| PnL (Profit & Loss) | Shorthand for your profit or loss on a position |
| Spread | The difference between the highest price someone is willing to buy (bid) and the lowest price someone is willing to sell (ask). Tighter spreads usually mean more liquid markets |
| Slippage | The difference between the expected price of a trade and the price it actually executes at. Slippage is common in fast or low-liquidity markets |
| Liquidity | How easily an asset can be bought or sold without moving its price too much. High liquidity = easier, smoother trades |
| Volatility | How much and how quickly the price of an asset moves up or down. Crypto markets tend to be more volatile than, say, stock markets |
| Blue-chip | Well-established assets with high liquidity and large market caps (e.g., ETH, BTC) |
| Long-tail | Smaller, niche assets with low trading volume and liquidity. Riskier to trade due to higher slippage and volatility |
| Bullish | A sentiment expecting prices to rise |
| Bearish | A sentiment expecting prices to fall |
| Hawkish | A policy stance that favors tighter monetary conditions (e.g., higher interest rates), usually seen as negative for assets like crypto |
| Dovish | A policy stance that favors looser monetary conditions (e.g., lower interest rates), usually seen as positive for assets like crypto |
Trading positions
| Term | Definition |
|---|---|
| Long | Direction you take if you're betting on the price going up |
| Short | Direction you take if you're betting on the price going down |
| Leverage | A multiplier on your capital, amplifying gains and losses. Leverage is a key feature of perp trading that allows you to control larger positions. Learn more here |
| Margin | The amount of collateral you put up to open a trade |
| Order size | Your total position size on a trade calculated as (margin × leverage) |
| Notional value | The total value of your position. It represents the full trade size you're controlling, not just the margin you put up. Example: $1,000 margin at 10× leverage = $10,000 notional value |
| Maintenance margin | The minimum amount of margin you must keep to hold a position open. If your balance falls below this, your position will be liquidated |
| Liquidation | The point at which your equity falls below requirements and your position is closed automatically to prevent further losses |
| Hedging | Opening a position designed to offset potential losses in another position. Also known as risk management with assets |
Orders and Execution
| Term | Definition |
|---|---|
| Market order | An order to buy or sell immediately at the current market price. Fast, but may result in slippage |
| Limit order | An order to buy or sell at a specific price or better. Offers more control, but may not fill if the market never reaches that price |
| Stop loss | A price parameter where the position auto-closes to limit losses. Note: may not execute at the exact price in fast or illiquid markets |
| Take profit | A price parameter where the position auto-closes in profit. Note: may not execute at the exact price in fast or illiquid markets |
| Entry price | The average price at which your position was opened |
| Position size | In tokens: the quantity of tokens you're long or short; In currency: the total notional value of your position |
| Maker fee | The fee charged when you place an order that adds liquidity to the order book (e.g., a limit order that doesn't fill immediately). Typically lower than taker fees |
| Taker fee | The fee charged when you place an order that immediately removes liquidity from the order book (e.g., a market order). Typically higher than maker fees |
Technical indicators
| Term | Definition |
|---|---|
| Candlestick chart | A chart type that shows four data points per time period: open, high, low, and close price. When volume is also included, this is referred to as OHLCV data |
| Moving average (MA) | The average closing price of an asset over a set number of periods (e.g. MA20 = last 20 periods). Shorter MAs respond more quickly to recent price changes; longer MAs change more slowly and reflect a longer price history |
| Bollinger Bands (BOL) | Three lines plotted around price: a middle moving average (MA20) and upper/lower bands set two standard deviations above and below it. The bands widen during periods of higher volatility and contract during periods of lower volatility |
| RSI (Relative Strength Index) | A momentum oscillator that measures the speed and magnitude of recent price changes, on a scale of 0–100 |
| MACD (Moving Average Convergence Divergence) | A momentum indicator that tracks the relationship between two exponential moving averages of price. Displayed as a MACD line, a signal line, and a histogram showing the gap between them |
| Volume | The total number of tokens traded in a given period |
Derivatives and metrics
| Term | Definition |
|---|---|
| Perps | Short for perpetual futures. A type of derivative trading with no expiration date, letting you speculate on price movements indefinitely |
| Derivatives | Financial contracts whose value comes from an underlying asset (e.g., tokens, commodities, indexes). Perps and futures are common types |
| Funding rate | A periodic payment between long and short traders to keep perp prices aligned with spot prices. Funding can be positive (longs pay shorts) or negative (shorts pay longs) |
| ROI | Return on investment. How much you made or lost on a trade relative to the amount you put in |
| Unrealized PnL | Profit or loss on an open position that fluctuates with the market |
| Realized PnL | Profit or loss locked in after closing a position |
| Open interest | The total number of outstanding contracts (longs + shorts) in a market. High open interest often means high activity and liquidity |
| APY (Annual Percentage Yield) | The rate of return on an asset over one year, including the effect of compounding. APR (Annual Percentage Rate) is the same calculation without compounding. Used in staking and lending to indicate expected returns |
| Oracle | A system that brings real-world data onto the blockchain. In prediction markets, oracles report verified event outcomes to smart contracts so markets can settle automatically |
| Auto-deleveraging (ADL) | A last-resort mechanism used by perp exchanges during extreme volatility. When a losing position can't be covered by the trader's margin or the exchange's insurance fund, the system automatically reduces or closes positions on the winning side to keep the market solvent |