Trading Glossary

Ask

An order listed on the sell side of the order book

Bid

An order listed on the buy side of the order book

Base Currency

The first currency in the currency pair is called the base currency. For example, the base currency in the currency pair XBT/EUR is XBT

See: https://support.kraken.com/hc/en-us/articles/203053186-Currency-Exchange-Buying-Selling-and-Currency-Pair-Selection

Bid/Ask Depth

The Bid/Ask Depth represents the cumulative volume of buy and sell orders at a particular price. The bid depth at a given price is the cumulative volume of current buy orders on the book at that price or higher, while the ask depth at a given price is the cumulative volume of current sell orders on the book at that price or lower. 

Bid/Ask Spread

The difference in price between the highest bid and the lowest ask on the order book.

The bid/ask spread chart available for Kraken markets only shows the spread between the highest limit buy order and the lowest limit sell order (plotted over time). A market order will fill in this gap if there are matching market orders of the opposing type sufficient to fill it. Otherwise it will fill, at least in part, using limit orders of the opposing type.

Here's an example from the XBT/EUR-market:

Bid-Ask-spread.png

See: https://www.kraken.com/charts 

Depth Chart

A visual representation of the demand and supply at different price levels. The bid/ask depth available for Kraken markets only shows the bid and ask depth of limit orders on the order book.

Here's an example from the XBT/EUR-market:

Market-depth.png

See: https://www.kraken.com/charts

 

Cancelled orders

A cancelled order is an order that has been withdrawn from the order book without being fully filled. A cancelled order will either be untouched or partially filled.

See: https://support.kraken.com/hc/en-us/articles/235162907-Canceled-Orders

Currency Pair

In a currency pair, the value of the base currency is displayed relative to the quote currency. The currency pair is priced in terms of the quote currency and the price indicates how much of the quote currency is required to buy one unit of the base currency.

For example, a price of 1000 USD for XBT/USD means that 1000 USD is required to purchase 1 XBT. In currency pair trading on Kraken, a pair can effectively be a single trading instrument that is opened as a position by buying (going long) or selling (going short) the pair.

See: https://support.kraken.com/hc/en-us/articles/201893658-What-currencies-can-I-trade-on-Kraken

Collateral

In order to trade on margin you are required to have sufficient balance in one or more collateral currencies

See: https://support.kraken.com/hc/en-us/articles/360000381846-How-to-deposit-or-withdraw-fiat-currencies-via-Kraken

Fiat currency

A currency declared by a government to be legal tender, such as the US Dollar (USD) or Euro (EUR). Kraken supports multiple different fiat currency funding and trading methods.

See: https://support.kraken.com/hc/en-us/articles/360000381846-How-to-deposit-or-withdraw-fiat-currencies-via-Kraken

Fill

To fill a buy or sell order is to execute the order by matching it with one or more orders of the opposing type. Buy orders are filled by matching with sell orders (and vice versa). When an order has been completed, it is often referred to as ‘filled’.

Leverage

Leverage enables you to increase your exposure to the market without increasing your capital investment. For example, a collateral balance of 10,000 USD increases your buying power to 50,000 USD when trading on margin and using 5:1 leverage.

See: https://support.kraken.com/hc/en-us/articles/202967016-How-do-I-trade-using-leverage

Limit order

A buy or sell order that will only fill a at a pre-specified price.

See: https://support.kraken.com/hc/en-us/articles/206899287-How-do-I-set-prices-for-limit-orders

Liquidity

A term that describes the amount of activity on a market. High liquidity means a high volume of activity in a market where lots of parties are willing to take the other side of a trade.

Maker

A trader who adds liquidity to the order book by placing a limit order that is not matched/filled immediately with an existing order on the order book.

Margin

When trading on margin you are using borrowed funds to place orders, as opposed to directly using the funds deposited or held in your account.

See: https://support.kraken.com/hc/en-us/articles/203325693-Margin

Margin borrow limits

The margin borrow limits determine the maximum amount of margin that can be tied to your leveraged orders for a particular currency. Not all currency pairs on Kraken can be traded on margin and each currency limit is independent from the other.

See: https://support.kraken.com/hc/en-us/articles/209238787-Margin-borrow-limits

Market order

A market order will buy (or sell) at the best average market price.

See: https://support.kraken.com/hc/en-us/articles/203325783-Market-and-Limit-Orders

Minimum order size

Each tradable currency on Kraken has its own minimum order size. An order placed with a volume below the minimum order size will be rejected.

See: https://support.kraken.com/hc/en-us/articles/205893708-What-is-the-minimum-order-size-

Open orders

Open orders can either be “touched” or “untouched”. An "untouched" open order is an unfilled order. A "touched" open order is an order that is partially, but not completely, filled. A completely filled order will be listed as closed.

Order book

The order book is a list of current buy and sell orders, which is used by an exchange to fill orders on a specific market.

The order book consists of both orders to buy or sell at a fixed price ("limit" orders) and orders to buy or sell at the best available price ("market" orders). But since market orders only appear in the order book momentarily, they aren't shown in the publicly viewable order book (i.e. the order book shown under "Market Data" on Kraken).

Here's an example:

Order-book.png

See: https://www.kraken.com/charts

Quote currency

The quote currency is the second of a currency pair. For example, in the currency pair XBT/USD, USD is the quote currency.

See: https://support.kraken.com/hc/en-us/articles/203053186-Currency-Exchange-Buying-Selling-and-Currency-Pair-Selection

Stop loss order

A Stop loss order is typically used as a closing order to limit your losses or lock in your profits on a long or short position. But they can also be used to open a position.

See: https://support.kraken.com/hc/en-us/articles/203325793-Stop-Loss-Orders

Take profit order

Take profit orders are used to set a target profit price on a long or short position. The profit price can be set in terms of absolute price, or as a percentage. As with stop orders, take profit orders can also be used to open positions.

See: https://support.kraken.com/hc/en-us/articles/203053226-Take-Profit-Orders

Taker

A trader who removes liquidity from the book by placing an order that is immediately matched with an existing order on the order book.

Volatility

A market’s volatility is its likelihood of showing rapid and unpredictable price movements.