Open the Binance app and you are bombarded with terms like candlesticks, limit orders, market orders, and stop-loss. These terms sound technical but are not hard to understand. Today we will explain all the common ones in plain language. If you want to follow along, open Binance Official or the Binance Official APP to see what these features look like in practice. iPhone users can check the iOS Installation Guide to get the app installed first.
Basic Trading Terms
Trading Pair
A trading pair is a combination of two currencies, showing which currency you use to buy or sell another. For example, "BTC/USDT" means you buy or sell BTC using USDT. The first is the "base currency" (what you want to buy or sell), the second is the "quote currency" (what you pay with).
Most trading pairs on Binance use USDT as the quote currency since it is the most widely used stablecoin. You will also see pairs quoted in BTC or BNB.
Spot Trading vs. Futures Trading
Spot trading means buying cryptocurrency directly. You own exactly what you buy. It is like shopping at a store: you pay and it is yours.
Futures trading involves trading price contracts on cryptocurrency. You do not necessarily own the actual coin. Instead, you are betting on whether its price will go up or down. Futures allow leverage, amplifying both gains and losses. Beginners should absolutely start with spot trading.
Placing an Order
Placing an order means submitting a buy or sell request. You tell the system what price and quantity you want to trade at, and it matches you with a counterparty.
Limit Order
A limit order lets you specify an exact price. For example, if Bitcoin is currently at 60,000 USDT but you think it will drop to 58,000, you can set a limit buy order at 58,000. When the market price reaches 58,000, your order automatically executes.
The advantage is price control; the downside is that if the market never reaches your price, your order may sit unfilled indefinitely.
Market Order
A market order executes immediately at the current best available price. Just enter the quantity or amount, and the system fills it right away at the best current price.
The advantage is speed. The downside is that during high volatility, the actual fill price may differ from what you saw (this is called "slippage").
Maker and Taker
Maker: Your order does not execute immediately. It sits in the order book waiting for someone to trade against it. You "make" liquidity for the market.
Taker: Your order immediately fills against an existing order in the book. You "take" the liquidity someone else made.
Generally, market orders are always Taker orders. Limit orders can be either Maker or Taker depending on the situation. On Binance, Maker and Taker fees are the same (0.1%), though some platforms offer lower fees for Makers.
Candlestick Chart Terms
Candlesticks
Candlestick charts are the most common way to visualize price movements. Each candlestick represents price changes over a time period and contains four key data points:
- Open: The price at the start of the period
- Close: The price at the end of the period
- High: The highest price during the period
- Low: The lowest price during the period
If the close is higher than the open, the candle is typically green (price went up). If the close is lower, it is red (price went down). Note: Binance defaults to green-up/red-down. You can change this in settings.
Timeframes
Candlestick charts can be set to different timeframes: 1 minute, 5 minutes, 15 minutes, 1 hour, 4 hours, 1 day, 1 week, etc. Different timeframes mean each candle represents a different time period.
Short-term traders typically watch 15-minute or 1-hour candles; long-term investors usually look at daily or weekly charts. Beginners should start with daily charts, as shorter timeframes are too volatile and overwhelming.
Volume
Below the candlestick chart, you will usually see a series of bars. That is the trading volume, showing how much cryptocurrency was bought and sold during each period.
Volume is an important supporting indicator. Generally, rising prices with increasing volume suggests strong upward momentum. Rising prices with declining volume may signal weakening momentum.
Order Book Terms
Buy and Sell Orders (Bids and Asks)
On the trading page, you will see two columns of numbers, typically green for buy orders (people wanting to buy at that price) and red for sell orders (people wanting to sell at that price).
The buy side shows all current buy orders with their prices and quantities; the sell side shows all current sell orders. By observing the order book, you can roughly gauge the balance of buying and selling pressure in the market.
Depth Chart
The depth chart is a visualization of order book data, using two lines to show cumulative buy and sell orders at different price levels. It helps you quickly identify price zones with large concentrations of orders.
Slippage
Slippage is the difference between the price you see when placing an order and the actual execution price. Slippage tends to be more significant during high volatility or with large orders. Using limit orders eliminates slippage, as they only execute at your specified price or better.
Fund-Related Terms
USDT
USDT is a stablecoin issued by Tether, pegged approximately 1:1 to the US dollar. It is the most widely used pricing and trading medium in the crypto market. Most of your buying and selling on Binance will be settled in USDT.
Deposit and Withdrawal
Deposit means transferring cryptocurrency from outside into your Binance account. Withdrawal means transferring cryptocurrency from your Binance account to an external address. It is critical to select the correct network (chain). Choosing the wrong one could result in permanent loss of funds.
Gas Fees
Gas fees are the network transaction fees paid for blockchain transfers. Different networks have different gas fees. For example, the Ethereum network typically has high fees, while the TRON network (TRC20) has very low fees. When withdrawing from Binance, the system displays the fee for each available network.
FAQ
Q: Do I need to learn technical analysis to read candlestick charts?
A: Not necessarily, but understanding basic candlestick patterns will help you make better trading decisions. Beginners do not need to learn complex technical analysis. Just understanding the basics of candlesticks, support levels, and resistance levels is enough to start.
Q: Should beginners use limit orders or market orders?
A: We recommend beginners prioritize limit orders. While market orders are more convenient, limit orders give you price control and help avoid unfavorable fills during volatile periods.
Q: Could USDT lose its peg (stop being worth $1)?
A: There is a theoretical depegging risk, and there have been brief minor deviations historically. However, since Tether claims to have sufficient asset reserves and USDT has enormous market cap and usage, a major long-term depeg is considered unlikely. As a precaution, it is not advisable to hold all your assets in USDT long-term.