Cryptocurrency Glossary

What is an exchange?

An exchange is a place where buyers and sellers meet. In the world of cryptocurrencies, exchanges are places where traders buy and sell digital assets. Some exchanges allow users to trade directly, while others act as middlemen, matching buyers and sellers. The latter type of exchange is known as an order book exchange, where users can see the prices at which different assets are traded.

How does an exchange work?

Exchanges are like stock exchanges in that they have a trading floor. On the trading floor, there are several traders who are trying to make a profit by buying low and selling high. These traders use tools such as spreadsheets or web-based platforms to keep track of the market and to determine how much they should be buying and selling. Once the traders have set their price, they will try to buy or sell the asset at this price. If the asset is selling at a lower price than the trader set, then the trader will buy the asset. If the asset is selling for more than the trader set, then he will sell the asset.

The difference between the bid and ask price

The difference between the price at which the asset is being bought and sold is called the spread. This spread can be positive or negative. When the spread is positive, the asset is said to be over-sold. Conversely, when the spread is negative, the asset is said to have been over-bought.

Why are there spreads?

There are several reasons why there are spreads on the market. One reason is because some assets are highly volatile. As a result, there are times when an asset is selling for less than it was just a few minutes ago. At these times, the seller will offer a lower price, hoping to get rid of the asset. In addition, many traders will set a limit order, which will cause the asset to automatically sell at a certain price. If the asset is not sold at the limit order price, then the asset will automatically be bought back at the limit order price.

Other reasons for spreads

There are other reasons why there are spreads. For example, some assets have a small number of buyers. As a result, there may be a large number of people who want to sell the asset. However, the supply of buyers may be smaller than the demand for the asset. As a result, there is a shortage of buyers. In this case, the asset is over-supplied, so the price will go up. On the other hand, if the asset has a large number of buyers, then there may be a shortage of buyers. In that case, the price will go down.

How are spreads calculated?

There are several ways that spreads are calculated. One way is to take the average of the highest bid and lowest ask price. Another way is to take the highest bid minus the lowest ask.

What is an order book?

The order book is a chart that shows the price at which the asset has been bought and sold. Traders can look at the order book to see what price the asset has been sold for. They can also look at the order book to determine whether the asset is over-sold or over-bought.

Some exchanges have order books with vertical lines that show the price at which the asset was last bought or sold. Other exchanges have order books that are flat.

How are order books used?

Traders can use order books to decide whether they should buy or sell an asset. When a trader sees that the asset is over-bought, then he will sell the assets at the current price. When a trader sees that an asset is over-sold, then he will buy the asset at the current price.

What is an arbitrage?

An arbitrage occurs when there is a difference in price between two assets. An arbitrage opportunity is created when there is a difference in prices between two assets. An arbitrager can take advantage of this difference by buying one asset and selling another asset at a higher price.

What is a p2p exchange?

A p2p exchange is an exchange where traders can trade directly with each other without the need of a third party. There are many different types of p2p exchanges. Some p2p exchanges are free to use. Others charge a fee to use the platform.

What is a futures exchange?

Futures exchanges are places where traders can buy and sell assets based on future events. Futures exchanges are similar to options exchanges.

What is a crypto academy?

Crypto academies are websites that provide information about the different types of cryptocurrencies. Many crypto academies are affiliated with major exchanges.

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