Crypto Trading Bot Glossary

Plain-English definitions of the terms that come up when you run an automated crypto trading bot, from DCA and EQ price to leverage, liquidation, and self-custody.

API Key: A credential that lets software trade on your exchange account. A trade-only key can place orders but cannot withdraw funds, which is the only permission a safe bot needs. API key security FAQ
Backtesting: Testing a trading strategy on historical price data to see how it would have performed before risking real money. DCA backtester
Bollinger Bands: A volatility indicator made of a moving average with an upper and lower band set a number of standard deviations away, used to gauge how stretched price is.
BYOK (Bring Your Own Key): Supplying your own AI provider key, such as Claude, GPT, Gemini, or a local Ollama model, so AI features carry no marked-up usage fee. Signals and strategy FAQ
CCXT: An open-source library that gives a bot one common way to talk to many crypto exchanges. TradeArmor uses it to support eight exchanges. Exchanges and setup FAQ
Copy Trading: Automatically mirroring another trader's buy and sell signals. TradeArmor's version is peer-to-peer, with each follower's API keys kept on their own machine.
Cost Basis: The original value of an asset used to calculate gain or loss for tax, determined by a method such as FIFO, LIFO, or HIFO. Tax reporting FAQ
DCA (Dollar-Cost Averaging): Buying an asset in stages as the price moves rather than all at once, which averages your entry price over several buys. DCA strategy FAQ
DCA Level: One staged buy in a dollar-cost-averaging ladder. TradeArmor's engine supports up to 20 levels per position with configurable spacing and size. DCA average price calculator
EQ Price (EQPRICE Buy Gate): A rule that only allows a deeper DCA buy when price is below your lowest unsold leg, not just below your average. TradeArmor matches ProfitTrailer's EQPRICE logic. TradeArmor vs ProfitTrailer
FIFO: First in, first out: a cost-basis method that treats the earliest-bought units as the first ones sold.
Futures: Leveraged contracts that let you trade an asset's price, long or short, without holding the asset itself. They carry liquidation risk. Futures and leverage FAQ
Grid Bot: A bot that places a ladder of buy and sell orders at set price intervals to profit from price moving up and down within a range.
HIFO: Highest in, first out: a cost-basis method that treats the most expensive units as the first ones sold, often to reduce taxable gain.
Hybrid Mode: A strategy mode where built-in signals propose trades and your chosen indicators act as filter gates before a trade fires.
Keep Balance: A reserve of cash a bot will not spend, so it does not go all-in during a drawdown. Reserved against total portfolio value.
Leverage: Trading a position larger than your margin. Higher leverage magnifies gains and losses and moves your liquidation price closer to entry. Liquidation calculator
Liquidation: The forced closing of a leveraged position when its margin falls below the exchange's maintenance requirement, usually losing that margin. Liquidation calculator
MACD: Moving Average Convergence Divergence, a momentum indicator built from the difference between two moving averages and a signal line.
Maker Fee: The fee, usually lower, charged for an order that adds liquidity to the order book by resting rather than filling immediately. Trading fee calculator
Paper Trading: Running a strategy on live market prices with a simulated balance and no real execution, to validate it before going live.
Perpetual (Perp): A futures contract with no expiry date, the most common form of leveraged crypto trading.
Position Size: How many units to trade, ideally set so that hitting your stop-loss costs no more than a fixed share of your account. Position size calculator
PWA (Progressive Web App): A website that can be installed to a phone home screen and behave like a native app. TradeArmor's dashboard is a PWA.
RSI: Relative Strength Index, a momentum oscillator from 0 to 100 used to judge whether an asset is overbought or oversold.
Self-Custody: Keeping control of your own funds and keys rather than entrusting them to a third party. The core principle behind a self-hosted bot. API key security FAQ
Self-Hosted Bot: A trading bot that runs on hardware you control, so your exchange API keys stay on your machine instead of a vendor's servers. Self-hosted bots FAQ
Signal: An automated indication to enter or exit a trade. TradeArmor ships built-in BTC/USDC spot signals with a multi-year track record. Signals and strategy FAQ
Slippage: The difference between the price you expected and the price your order actually filled at, usually larger in fast or thin markets.
Spot Trading: Buying and holding the actual asset with no leverage, as opposed to trading leveraged futures contracts.
Stop-Loss: An order that closes a position once it reaches a set loss, used to cap downside on a trade.
Supertrend: A trend-following indicator based on Average True Range that flips between an up and a down state as the trend changes.
Take-Profit: An order that closes a position at a target gain above your entry, locking in profit without watching the screen. Take-profit calculator
Trailing Take-Profit: A take-profit that moves up as price rises and only triggers if price falls back by a set amount, capturing more of a run.
Trading Group: A set of coins run on their own independent strategy within one bot, so different groups can use different rules at once.
VWAP: Volume-Weighted Average Price, the average traded price over a period weighted by volume, used as a fair-value reference.
Webhook: An HTTP callback that delivers an event, such as a TradingView alert, to your bot so it can act on it automatically.