By Hassan Mehmood (Saudi Arabia)
If you have done some correspondence with any financial market regardless of its origin, then you might have bumped into multiple terms that are used occasionally between traders and investors. You might not know about these terms in detail, and at first, it might sound a little unprecedented, but in order to move further and market yourself in a better way, you must build not only a deep understanding of these terms but also their meaning and associated elements with them.
The world of trading and investment has its own specific language, and if you wish to move further, then you have to understand these terms. As these will help you to understand more periodically the events that are taking place within the financial markets and how can you keep up with the momentum that other traders and investors are showcasing, having to know more about what they are doing than you. So without any further ado, let’s get right into these terms, their syntax, origin, what do they mean, and more promptly how these can help you to find your standing within the financial market;
FUD (Fear, Uncertainty and Doubt)
FUD might not be a proper trading term, but it is more in sync with financial markets than any other term that you might run into. It is a common strategy out there that finds solace in discrediting specific products, assets, or a financial company by divulging into the spread of falsified information about that specific financial entity. The very aim behind all of this is to propagate fear about that specific element within the market and among the hearts of investors and traders alike.
There might be a competitive advantage behind this falsified preaching of information, and it could lead to profit for some traders and investors who were betting against that specific product or element. This bit of damaging news can issue a wide blow to the asset towards which it is focused. FUD is more common within the crypto market than any other financial market out there because many investors might enter a specific short position, and at the same time, misleading news or harmful information about that crypto might be circulating, so these investors see this thing as an opportunity that they can cash.
There are occasionally some cases in which the information about a specific asset comes out to be true, but in most cases, it is simply misleading and false information. Before jumping to any conclusions or entering into a market position based on the findings that were provided to you via the misleading piece of news, it is better to consult each and every angle and to see this thing not in tiny bite-size pieces but as a whole picture that is being painted before you.
FOMO
Another quite eccentric term that you might have run into is FOMO or ‘fear of missing out,’ it is more of an emotional establishment with how investors feel towards a certain opportunity that has arisen within the market. Sometimes emotions run deep within investors and traders who take part in crypto trading because it is relatively a more recent market, and therefore opportunities are more common here; when these go by, there is usually a lot of guilt and emotional exertion on the part of investors and traders.
Suppose there is a bull market and an investor simply doesn’t have the money with them to purchase a set or pair of crypto, and they’re missing out on this great opportunity, so what they’re doing here? They are simply fretting over how this opportunity is going to slip right out of their hands. FOMO is also quite popular within social media.
You might have seen a mix of recent and new posts within your social media account and how these things are not shown in a proper chronological order allowing you to catch up with everything that has happened since the last time you signed in. This is done deliberately, and therefore it is quite hard to discern between something actually being an opportunity or false hype built around it via intended parties. This also makes some people, whether simple users of the social media interface or real-time investors and traders, check back, again and again, to make sure that they are not missing out on any important opportunity at all.
HODL
HODL is an abbreviation of ‘hold on for dear life’. It is not primarily a crypto term, but it is now being used more and more here because of the significant gains that people and traders were able to get holding off the selling of their crypto assets for a longer period of time. Its use became more common in 2013 after Bitcoin became a mainstream cryptocurrency and people were just posting stuff on social media saying that ‘I AM HODLING CRYPTO’ at the moment, and they would receive tons of praise from other people who are doing the same or willing to do so.
HODL is a misspelled version of hold, and it usually pertains to people holding on to their investments despite some serious price drops. People who don’t want to go into a short-term position and those who want to see their investment through usually take on HODL because they are willing to go all the way. These people are known as HODLers because they don’t want to sell their investment off when there is a sustained drop in the value of the assets. Other than that, the term could also refer to people who have a strong belief in a dedicated crypto token, and our going into this massive investment for that particular token beard it is a bit similar to the old buy and hold investment strategy that has been present in stocks, forex and commodity markets long before crypto was even a thing.
The common strategy here is to hold on to an undervalued or depreciated asset and then hold it off for as long as possible, surging through multiple price cycles and ignoring the temptation to sell even when every other person in the market is doing it.
BUIDL
BUIDL is another deformed term just like HODL; it is the misspelling of the word ‘build’, and it refers to people who keep on building their investment portfolio into a dedicated cryptocurrency or a variety of them despite major price fluctuations. They don’t chip in or sell their assets as soon as there is panic in the market, but they continually have faith and move forward. MicroStrategy is a bright example of BUIDL and is known as a ‘BUIDLer’ because it continues to amass more and more of Bitcoin after each price cycle is finished and a bull run is about to start.
It has not sold even a single Bitcoin token during all these years of building a rather promising Bitcoin investment portfolio. These types of investors are not in it only for the profit or a handsome return on their investment but the general belief in blockchain technology and the idea of decentralization, and therefore they continue to show their support towards these assets no matter what kind of fluctuations the market is throwing at them.
BUIDL is all about helping others gain access to the most sophisticated financial technology the world has ever seen in the form of cryptocurrencies. It is also a rather mind-boggling reminder that no matter what others say and how tedious the market is turning, you must keep your heads down and continue building your assets as much as you can.
ROI
Return on investment or ROI is a rather common term, and you might have heard it on multiple avenues and financial markets. It is a measure of how the original investment of the investor is performing at the moment. When you invest your money into something, and it gets locked away for a certain period of time, you have to calculate the ROI beforehand to understand just how much profit you will run into after the waiting time is over, and you are finally able to liquidate your assets. It also allows you to measure the performance of various cryptocurrencies and commodities in real-time so you can have an idea about the final outcome allowing you can make a more informed decision.
There are multiple factors that intervene when it comes to comparing different investments and their ROI. You have to investigate the risks that are involved in buying and storage a particular investment; what the final time period is going to be? How you will finally be able to liquidate your assets and other such things also go into measuring and then comparing the final ROI of different assets.
All-Time High
This is something that is pretty elaborative in itself and doesn’t require much explaining at all. An all-time high refers to a state when a dedicated crypto asset has reached a record high price in its entire trading history. It is a term that Bitcoin fans and investors might have heard a lot in the recent few months because that was the time when Bitcoin opted for a new all-time high, and the performance of the asset was just over the charts.
The most elementary aspect of an all-time high asset is that anyone who is presently in possession of such an asset is already in profit because it means that they might have bought it at a reduced price, and now the price has gone up, thus providing them with a decent return on investment. For the assets that have been within a stretched out bear market, many traders just want to sell their positions and exit the market, but if they should get on with it just for a few more days or even weeks, then they would be able to see a new all-time high for that particular asset.
Surely there are other factors at play here, but usually, when an asset has been at its lowest, that is the time when the market is about to take a shift, and the asset is about to reach a new all-time high. Now there is a common misconception that corresponds with the concept of an all-time high. If the price of an asset is building up and going higher where it ultimately reached a new all-time high so, does this mean that the price will continue to climb up?
It is never the case; even if an asset has reached a new all-time high, it is still tied with market volatility that can kick in at any moment without any prior notification and just bash the asset to a declining phase. An all-time high is just a measure of how it is performing at the moment and it being able to fling its own price momentum of the past, reaching an absolute highest value in all time.
DYOR
The DYOR loosely translates into ‘do your own research’. It is a term that is closely tied with fundamental analysis and strongly stresses that any investor and trader who wishes to take part in crypto endeavours must do their own research before putting their foot down and investing their money into a certain cryptocurrency.
You should not trust whatever data is out there because it comes from bleak sources that can’t be trusted until cross-verified. It is a great thing to take the data that is already available and confirm its bias and standing rather than just accepting it with closed eyes because at the end of the day; it is not going to help you get any further in your trading endeavours.
Come up with your own unique trading strategy instead of taking inspiration from many other financial gurus and crypto traders out there. Because when you are coming up with your own strategy, you know yourself, the type of investment you have, and every factor and coefficient of the equation is perfectly balanced and properly in sync with the goals you have rather than following the equations that are crafted for people with different goals than yourself.
You might run into certain disagreements between other fellow investors because not everyone is going to be bullish on a dedicated asset; obviously, some other trader out there is going to be bearish on that one, and there’s nothing you can do about it. Different opinions must not hurt you but try to choose a more streamlined path when it comes to investing because then you will not only be able to undertake the value of the asset that you are trying to invest in but could also take into consideration the ROI.
But these things don’t happen on their own; you need to take everything into the equation that you were looking for because this is the only thing that is going to work for you, something that you have developed and worked on for yourself and yourself only.
AML
AML refers to anti-money laundering, and it is the agreement that every crypto exchange or vendor out there drums up with their users, asking them to declare that they are not involved in any money laundering practices at all. To do so, they will have to provide all of their valid credentials regarding personal information and financial records, and then the exchange will cross verify the data with the concerned agencies.
Only when everything is up to the mark, and there is no ill-doing reported of any kind the user will be given the green light to access and trade simultaneously over a dedicated crypto exchange. AML makes it extremely harder for money launderers to move their money around in crypto because then these will be busted by the modern algorithms in place to deter these kinds of unofficial and rather exhilarating moves that these kinds of people make. This is to ensure the longevity and security of the crypto space, and by doing so, the market definitely becomes a more sordid and welcoming place for everyone, minus the illegal or illicit activities such as the likes of money laundering.
KYC
KYC or know your customer is a practice adopted by crypto exchanges and other crypto avenues to make sure that they have all the information of the user interacting with them to make the crypto market and the exchange a better and safer place for everyone. KYC involves running a background check on the user in question and finding any wrongdoings or illicit financial transactions on their part.
If something that fits this description is found, then they won’t be allowed to remain an active user of the said exchange, but on the other hand, if everything remains solid and their check comes in solid, then they have full access to all the dedicated features of the exchange. KYC can be understood as an initial screening that can be done to spot the money launderers right then and there and put a stop to the whole thing. AML and KYC work hand in hand to make sure that the crypto market and all the transactions that are taking place to and from the crypto exchanges and a myriad of users out there are fully secure and in line with the guidelines provided by international regulatory commissions.
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