Crypto Arbitrage and Futures Glossary
A quick guide to the terms that come up most when talking about funding rate arbitrage, perpetual contracts and bots. Use it as a reference, and click the links for the full articles.
Terms, part 1
- Leverage: a multiplier that lets you open a position larger than your margin. See leverage.
- Arbitrage: taking advantage of a difference in price or yield between two places at the same time. See arbitrage.
- Ask: the lowest price at which someone is willing to sell.
- Bid: the highest price at which someone is willing to buy.
- API: an interface that lets a program use your account without your password. See API key.
- Perpetual contract: a futures contract with no expiry. See perpetuals.
- Slippage: the difference between the expected price and the executed price.
- FOK (Fill or Kill): an order that fills entirely right away or is canceled entirely.
- Funding rate: a periodic payment between longs and shorts. See positive and negative funding rate.
Terms, part 2
- Prospector: the Multi Arbitrage filter that picks the coins. See Prospector.
- Hedge: a position that offsets the risk of another, such as a long and a short at the same time.
- Index price: the average of the coin’s prices across several exchanges. See mark price and index price.
- IOC (Immediate or Cancel): an order that fills what it can right away and cancels the rest. See IOC.
- KYC: identity verification required by exchanges.
- Liquidation: the forced closing of a position when the margin runs out. See liquidation price.
- Liquidity: how easily you can buy and sell without moving the price.
- Long: a buy position, which gains when the price rises. See long and short.
Terms, part 3
- Maker: someone who places an order on the book and waits. See maker and taker.
- Margin: the amount set aside to support a position.
- Cross margin: uses your whole balance as a cushion. See isolated or cross.
- Isolated margin: margin set aside separately for each position.
- Maintenance margin: the minimum margin required to keep the position open.
- Mark price: the price used for PnL and liquidation.
- Order book: the list of buy and sell offers.
- Orphan leg: when one of the two legs disappears and the other is left open on its own.
- PnL: the profit or loss of the position.
- Short: a sell position, which gains when the price falls.
- Spread: the difference between buy and sell prices. See spread.
- Stop: an order that closes the position when the price reaches a set value.
Terms, part 4
- Taker: someone who accepts an order that is already on the book.
- Take profit (target): an order that closes the position when it reaches a desired profit.
- Funding fee: another name for the funding rate.
- Triangular: arbitrage between three coins on the same exchange.
- USDT: a digital currency pegged to the dollar, used as margin and as a price base.
- Volatility: the intensity of price swings.
- IP whitelist: a list of addresses authorized to use a key. See IP restriction.
- Exit zone: in Multi Arbitrage, the point at 80% of the way to liquidation where the bot starts to exit. See protection.
Missing a term? See the arbitrage guides or create your account to use the guided setup, which explains every field.
How to use this glossary
Read through the terms for an overview, or use your browser’s search (Ctrl+F) to find a specific one. The most important terms each have a link to a full article. If a term shows up on a dashboard screen and is not here, the guided setup has an explanation next to each field.
Related guide: crypto arbitrage guides. See also all the crypto arbitrage guides.
Frequently asked questions
Where can I learn more?
Start with what crypto arbitrage is and perpetual contracts.
Are the terms the same on every exchange?
Generally yes, but menu and mode names can vary. Check the exchange’s documentation.
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This content is for information only and is not investment advice. Trading crypto derivatives involves a high risk, including the total loss of your capital. Past results do not guarantee future results, and the figures mentioned are examples. Before trading, check whether trading crypto derivatives is allowed in your country and what your tax obligations are. Assess whether the product suits your profile before investing.