Crypto Trading Bot Glossary
Every term you'll meet when running a crypto trading bot — defined in one or two sentences, with cross-links to the deeper pages.
Trading basics
Spot — Trading actual coins (you own them after the trade). Compare to Futures, where you trade a contract that tracks the price.
Perpetual / Perp — A futures contract with no expiry. Funded by a periodic payment between longs and shorts (the funding rate).
Limit order — A buy or sell at a specific price. Sits in the book until filled or canceled.
Market order — A buy or sell that fills immediately at whatever price is available. Risks slippage in thin books.
Maker fee — The (lower) fee you pay when your limit order adds liquidity to the book.
Taker fee — The (higher) fee you pay when your order removes liquidity by matching an existing one.
OCO (One-Cancels-the-Other) — A pair of orders where filling one cancels the other. Useful for "stop-loss + take-profit" setups.
Slippage — The difference between the price you expected and the price you actually got. Always positive in expectation; meaningfully so in thin books.
Spread — Difference between the best bid and best ask. Tight spreads = liquid market.
Leverage — Trading with borrowed capital. 5x leverage means a $100 position controls $500 of asset. Amplifies wins and losses.
Liquidation — Forced closure of a leveraged position when its margin falls below the maintenance threshold. Almost always at a loss.
Funding rate — Periodic payment between longs and shorts on a perpetual contract, used to peg perp price to spot price. See Funding-Rate Arbitrage.
Basis — The price gap between the spot market and the futures/perp market for the same asset.
Basis trade / Cash-and-carry — Long spot, short the equivalent perp; harvest the funding rate as profit. See Delta-Neutral Strategies.
Delta-neutral — A position whose P&L doesn't depend on price direction. See Delta-Neutral Strategies.
Hedge — A second position that offsets the directional risk of a first position.
Strategy types
Grid bot — Places a ladder of buy and sell limit orders around a price, profits from oscillation.
DCA (Dollar-Cost Averaging) — Buying a fixed dollar amount on a schedule, ignoring price.
Trend-following — Buy when price is rising, sell when it turns. Indicators: moving averages, ATR, ADX.
Mean-reversion — Assume price reverts to its average; sell extremes, buy retracements.
Market-making — Post bids and asks simultaneously, capture the spread.
Scalping — Many small, fast trades, each capturing tiny moves.
Arbitrage — Buy on the cheap venue, sell on the dear one. Cross-exchange, intra-DEX, or CEX/DEX. See Building an Arbitrage Bot.
Triangular arbitrage — Three-leg arb on a single venue, exploiting cross-rate mispricings.
Sniping — Buying a newly-listed or newly-launched token in the first block(s) of trading. Common on Solana via Telegram trading bots.
Copy-trading — Mirroring another wallet's trades automatically.
Bot infrastructure
API key — A credential that lets your bot act on your exchange account. Has scopes (read, trade, withdraw).
WebSocket — A persistent two-way connection to an exchange for real-time data. Far cheaper than polling.
REST API — Request/response API. Used for placing orders and one-off queries.
Rate limit — Maximum API calls per minute / per 10 seconds / per day. Exceeding it gets you throttled or banned.
Sub-account — A separate account under your master account, with its own balance and API keys. Used to isolate strategies.
VPS — Virtual Private Server. The cheap cloud machine you put your bot on so it runs 24/7.
Backtest — Simulating a strategy on historical data to estimate performance.
Paper trading / Sandbox / Testnet — Running the bot against real market data without real money. Always do this first.
Watchdog — A separate process or check that detects when your bot has failed and either alerts you or auto-closes positions.
On-chain (Solana, mostly)
RPC (Remote Procedure Call) — How your bot reads from and writes to a blockchain. See Solana RPC for the Solana specifics.
DEX (Decentralized Exchange) — An on-chain exchange. On Solana: Raydium, Orca, Meteora, Phoenix, Lifinity, etc.
AMM (Automated Market Maker) — A DEX model where prices are determined by a formula on top of pool reserves, not by an order book.
Pool — The on-chain account holding the reserves of an AMM.
Slippage tolerance — Your max acceptable price deviation when swapping. Set per-transaction.
Priority fee — An extra fee on Solana that bumps your transaction's priority during congestion.
Jito — A Solana infrastructure provider offering bundle-aware transaction submission. Used for MEV protection and atomic execution.
Bundle — A group of transactions submitted atomically (all land or none do). Provided by Jito on Solana, MEV-Boost / relays on Ethereum.
Shreds — Partial block packets Solana validators broadcast as they build a block. Give pre-confirmation visibility to bots and searchers. See Solana Shreds.
Geyser plugin — A Solana validator extension that streams account-state changes to subscribers in real time. Often offered by paid RPC providers.
Turbine — Solana's network-layer protocol for propagating shreds across validators.
Leader — The validator currently producing the block for a given Solana slot. Receives transactions directly.
getProgramAccounts — A Solana RPC call that fetches all accounts owned by a program. Powerful but expensive — most bots avoid it via streaming pool-state APIs.
SSE (Server-Sent Events) — A streaming HTTP protocol used by some pool-state APIs as a lighter alternative to WebSockets.
MEV
MEV (Maximal Extractable Value) — Profit a validator (or someone paying a validator) can make by reordering, including, or excluding transactions. See MEV Overview.
MEV searcher — A bot operator who hunts MEV opportunities (sandwich, frontrun, backrun, arbitrage, liquidations). See MEV Searchers.
Sandwich attack — A bot buys before your swap and sells after, profiting from the price impact you caused. See Sandwich Attack.
Frontrunning — Copying or beating someone else's profitable trade before it lands. See Frontrunning.
Backrunning — Trading immediately after another transaction to capture price gaps it left. See Backrunning.
Liquidation bot — A bot that monitors lending protocols and triggers underwater loans to claim the liquidation bonus.
Private order flow — Submitting transactions through a private channel (Flashbots Protect, Jito bundles, MEV-Share) instead of the public mempool.
Mempool — The pool of pending unconfirmed transactions on a blockchain. Public on Ethereum; not public in the same way on Solana — see Shreds.
Exchanges & products
CEX (Centralized Exchange) — Binance, Kraken, Coinbase, OKX, Bybit. Run by a company; you trust them with custody.
DEX (Decentralized Exchange) — On-chain exchange (see above). You hold custody; you sign every swap.
Hot wallet — A wallet with a key that's online (used by your bot). Limited capital.
Cold wallet — A wallet with a key kept offline. Where most of your treasury should live.
KYC (Know Your Customer) — Identity verification required by regulated CEXs.
USDT-M / COIN-M — Margin currency for Binance Futures. USDT-M settles in stables; COIN-M settles in the underlying coin.
Risk management
Stop-loss — An order that closes your position when price hits a defined level. Can be in your bot or on the exchange.
Take-profit — Mirror of stop-loss, at the upside target.
Position sizing — How much capital you put into a single trade. The single most important variable in long-term P&L.
Drawdown — Peak-to-trough decline. Reported as max drawdown (worst run) and current drawdown.
R-multiple — Profit or loss measured in units of risk. A trade with a $100 stop-loss that nets +$300 is a +3R trade.
Sharpe ratio — Risk-adjusted return. Higher is better; above 2 is good, above 3 is suspicious.
Win rate — Percentage of trades that close profitable. Means little without an R-multiple — a 30% win rate at +3R per win is excellent.
Read next
- What is a Crypto Trading Bot? → — start here if these terms are new
- Getting Started → — your first bot, end-to-end
- Choosing a Bot → — decision framework