Recently, many beginners have been confused by various terminology after entering the crypto space. I’ve decided to organize a beginner’s guide to answer some of the most frequently asked questions.

First, it’s important to understand the difference between fiat currency and tokens. Fiat currency refers to government-issued money like RMB or USD, backed by government credit. Tokens, often called coins, but more accurately called “digital assets” or “utility tokens,” represent proof of rights on the blockchain. Tokens have three core elements: they must be digital certificates of rights, secured by cryptography to ensure authenticity and tamper resistance, and they should be able to circulate on the network and be verified at any time.

Regarding trading operations, “building a position” means you are buying or selling a certain amount of digital currency for the first time, also called opening a position. “All-in” is a vivid term meaning putting all your capital into a single trade, which carries high risk. The difference between building a position and going all-in is that one is a normal operation, while the other is a gambling move.

Next, here are some concepts that are easy to confuse. What does “locking a position” mean? Simply put, it’s when the market moves against your original position, and you open a new position opposite to your initial one, effectively locking in the loss. Some also call it “hedging” or “locking in a position.” It sounds complicated, but it’s basically using opposite trades to hedge risk. The concept of “hedging” involves executing two trades in opposite directions with similar size, offsetting gains and losses. “Position” is a market term: buying a contract is called “long” (bullish), and selling is called “short” (bearish).

Now, some project-related terms. Airdrops are a popular marketing method in crypto, where project teams distribute free tokens to potential investors and community members. “Candy” is a similar concept, referring to free tokens given out during an ICO to promote the project. Private placement (private sale) is a way to invest in crypto projects and is an important method for founders to raise funds. ICO (Initial Coin Offering) is derived from the IPO in stock markets; it’s a fundraising method where blockchain projects issue their own tokens in exchange for market-tradable cryptocurrencies.

Regarding price movements, “breaking the issue price” means a certain cryptocurrency’s price falls below its issuance price. “Positive news” refers to information that can boost the token’s price, such as mainstream media coverage or technological breakthroughs; “negative news” has the opposite effect, causing the price to fall. “Rebound” refers to a small recovery during a downtrend caused by rapid declines, with a smaller magnitude than the decline. “Pullback” occurs during an uptrend, representing a temporary dip with a smaller decline than the previous rise. “Consolidation” describes a period of relatively stable price movement with small fluctuations.

In terms of trading tools, candlestick charts (also called Japanese candlesticks) are used to analyze market trends, showing open, high, low, and close prices. Trading volume reflects how much is traded and how many participants are involved, usually measured in the number of coins traded and the total trading amount.

There are also some advanced operations. “Arbitrage” (or “arbitrage trading”) involves exploiting price differences across different platforms. The process is to buy Bitcoin on platform A where the price is lower, then transfer and sell it on platform B where the price is higher, repeating the cycle. “Leverage trading” allows traders to invest with a small amount of capital to control a larger position, aiming for higher returns, but it also significantly increases risk.

Many beginners get caught up in pitfalls when trying to understand hedging strategies like locking positions. While it seems to reduce risk, misjudging the market can actually increase losses. Therefore, it’s best for newcomers to start with basic concepts, understand the logic behind these terms, and then proceed to practical trading.