Glossary

Airdrop: An airdrop is when a cryptocurrency venture grants free coins and tokens either to early members of a crypto community, and/or to spread awareness of the new currency. Airdrops are particularly popular in bear markets as a passive revenue source and can boost traders’ portfolios.

Altcoin: “Altcoin” is a merging of the words “alternative” and “coin.” It refers to all cryptocurrencies other than Bitcoin and Ether. Different altcoins have different uses. Some may be used as currencies, others may be utility tokens for providing services within a network, or security tokens that represent ownership rights or the transfer of value from assets to the token. Still others may be “meme coins” – currencies that are created as a kind of joke and have short bursts of popularity. In short, there are a wide range of altcoins with a wide range of purposes.  

AMM (Automated Market Maker):The underlying algorithm of liquidity pools which facilitates the swap of two tokens. It eliminates the need for centralized authorities (like exchanges and other financial entities), allowing two users to transact their assets without any intermediary facilitating the exchange.

Arbitrage: A strategy used by traders to take advantage of small price discrepancies across exchanges. A trader buys a token on one exchange and quickly sells it on another exchange for a higher price.

Ask: The price at which sellers are willing to sell. See also: Bid

Basis: Basis is the spot price of a crypto asset minus its futures price. Positive basis is when the spot price is higher than the futures price, and negative basis is when the spot price is lower than the futures price. “Basis risk” occurs when the spot and futures prices don’t line up.

Bear Market: A prolonged downtrend in the market of 20 percent or more for at least two months. Opposite of a Bull Market.

Bear Trap: A bear trap is a form of market manipulation that tricks bearish participants into believing that the price reversal indicates the start of a downtrend. A sharp resumption of the previous uptrend often follows it. 

Best Ask: This is the lowest price at which sellers want to sell an asset. See also: Ask

Best Bid: This is the highest price at which buyers want to buy an asset. See also: Bid

Bid: Price at which buyers are willing to buy. See also: Ask

Blockchain: A blockchain is a ledger that is stored across a network of computers, all linked together via the internet. Each computer is a node in this network, and each node has a copy of the ledger. The ledger holds its information in blocks of data. Each block of data is linked to the previously stored block, thus forming a chain.

Bull Market: A prolonged uptrend in the market of at least 20% over a period of at least two months. Opposite of a Bear Market.

Buy Order: An instruction to an exchange to buy an asset at a specific price. See also: Sell Order

Buying the Dip: A market timing approach in which traders buy up a coin when the market has a big negative decline (also called a “correction.”) Traders use this approach since it takes advantage of the bear market’s falling prices so that they may profit from the upside if and when prices go up again.

Buying/Selling Pressure: “Pressure” is what the majority of traders are doing. So, if most traders are buying, they’re thinking that the price is going to go up. This is buying pressure. If, instead, most traders are selling, then they’re thinking that the price is going to go down. This is selling pressure.

Buy Walls and Sell Walls: Buy or sell walls usually occur when large holders (whales) of any cryptocurrency try to manipulate market prices by placing a massive buy or sell order. Whales regularly create buy and sell walls to control the markets. 

Candlestick: “Candlesticks” are the red and green bars seen on a crypto chart. Each one represents an asset’s price movement during a particular period of time. Red candles indicate that the asset decreased in price and closed below its opening price. Green candles show that the price went up and closed higher than its opening prices.

Capitulation: Capitulation refers to when investors “panic sell.” They have lost faith in the market and start selling their positions as fast as they can. Massive amounts of sell orders ensue, and prices are driven lower and lower.

Censorship Resistance: Censorship resistance in the blockchain and crypto domain promotes decentralization and transparency. Simply put, it means external entities do not have the right to modify transactions or monopolize the blockchain network. 

Centralized Exchange (CEX): A centralized exchange is a marketplace in which the exchange itself functions as a middleman between traders, similar to an equity exchange in a traditional financial market. The centralized exchange maintains a digital order book, which posts all the open buy and sell orders, and matches buyers and sellers. Centralized exchanges are “custodial” in that they hold and transfer traders’ funds and process all transactions.

Coin-margined: Coin-margined perpetual futures have a cryptocurrency as their underlying asset and therefore their value is derived from it. They use the cryptocurrency as the collateral (margin), and are also settled with it. See: Inverse Future

Correction: A correction is a drop in price of between 10% and 20%. Corrections can last from a few days to three or four months.

Currency Pair: A currency pair tells you how much one currency (the base currency) is worth in terms of another (the quoted currency). In the case of BTC/USD, Bitcoin is the base currency, and the US dollar is the quoted currency. When buying a currency pair, the trader is buying the base currency (so in the BTC/USD pair, the trader is buying BTC with USD). When selling a currency pair, the trader is selling the base currency to get the quoted currency (i.e., selling BTC to get USD). There are two kinds of currency pairs in the crypto market – crypto-to-fiat and crypto-to-crypto.

dApp – “dApp” is short for “decentralized application.” A decentralized application is a digital application that runs on a blockchain, as opposed to an individual computer system. This keeps them free from being controlled by a central authority. dApps are useful in that they are flexible in terms of development, protect user privacy, and aren’t censored.

Day Trading: A strategy in which traders buy and sell assets in the same day. The idea is to pay attention to price fluctuations over the course of a day and act quickly on them in order to turn a profit. With an average holding period of minutes to hours, trader are in and out of trades multiple times a day.

Decentralized Exchange (DEX): A decentralized exchange is a marketplace that functions on a peer-to-peer model in which traders swap or trade cryptocurrencies directly with one another. In a DEX, there is no institution serving as a middleman to manage either custody and/or transfer of funds. Additionally, traders maintain control over their own wallet keys and security.

DeFi: Short for “Decentralized Finance.” DeFi is an evolutionary step beyond TradFi (traditional finance) in that it eliminates intermediaries, allowing people to transact peer-to-peer.

Derivative: A security whose value is derived from its underlying asset. Derivatives include, among others, futures, options, and indexes.

Derivatives Data: A form of technical analysis that gives you a picture of the sentiment in the market. By looking at data points like open interest, funding rates, and liquidations, you can get a sense of how much risk investors are currently taking, which market direction traders are tending towards, and how much loss traders had to take due to liquidations.

Directional Strategies: Directional strategies are based on traders’ predictions of how the market (or an asset) will develop. Ways to develop predictions can include things like tracking whales to frame a long-term bias, and seeing if hedge fund managers are bullish despite the downtrend. When using directional strategies, traders use technical analysis to find long opportunities with minimal risk.

Dollar Cost Averaging (DCA): Dollar-cost averaging is a scaling strategy of investing small amounts of money at different price levels and regular intervals to ‘average’ your entry point. This systematic investment approach reduces the risk of investing a larger capital at a potentially higher price all at once. 

DYOR: It is an acronym for Do Your Own Research, encouraging investors to do their research and complete due diligence into blockchain projects before investing their money.

Exposure: This is how much of an investor’s investable cash is vulnerable to the risks of particular markets or financial instruments. Essentially, it is how much the investor can lose. For example if a trader is only trading cryptocurrencies and has all their investable cash in it, their market exposure is 100% on cryptocurrencies and to all the market risks involved with them.

Fiat: Fiat refers to a currency backed by a government. The currency has value because the government says it has value, and everyone accepts that value. It is thus established by fiat (i.e., decree).

FUD: FUD is an acronym for fear, uncertainty and doubt. It is a common strategy used to strike fear in investors to manipulate cryptocurrency prices downward.

Fundamental Analysis: Fundamental analysis (FA) is used by traders to assess the “intrinsic value” of an asset.  By looking at various internal and external factors, traders try to establish whether the asset is undervalued or overvalued. Investors then use that information to strategically enter or exit an investment. FA draws on both quantitative analysis (statistics, reports, and other data), and qualitative analysis (track records of those involved, details of the underlying projects, and so forth). 

Funding Rate: Funding rates are a mechanism that exchanges use to ensure that perpetual futures trade at a price that is close to the price of the underlying spot markets.

Futures Contract: An agreement to buy or sell an asset at an agreed-upon price at a pre-set future date. The pre-set date is the contract’s expiration date, upon which the buyer is obligated to buy and receive the asset, and the seller must deliver the asset. Futures contracts are so-called because they help protect against unseen future consequences that might affect the asset’s price. Futures contracts are known as derivative contracts since their values are derived from the underlying asset. They have value unto themselves because they give the holder the right to buy and sell the asset at the set price at the set date. Futures contracts are often bought and sold by traders who have no interest in the underlying asset itself, but, rather, want to make money off of the fluctuation of the underlying asset’s price and the value of the futures contract relative to it.

Gas: Gas is the fee paid in Ether (ETH) for conducting a transaction on the Ethereum blockchain.

Governance Tokens: Governance tokens entitle holders to voting rights on proposed changes to a blockchain network or protocol.

Hedging: Hedging is a strategy used to protect against downward price movement. For example, a futures contract that establishes a price for a certain amount of a commodity to be bought or sold at a certain date is a “hedge” against a drop in the price of the commodity.

High-frequency Trading (HFT): This trading technique uses algorithms to analyze volumes of data so as to find trading opportunities and then make quick trades. Since HFT is computer-driven, it  is much faster than what humans are capable of, and can initiate numerous trades in seconds.

HODL: A simple long-term investment strategy. A trader buys a cryptocurrency and holds it until it reaches their desired price. The  term originated when someone misspelled ‘HOLD” on social media. HODL is advice commonly shared amongst crypto traders to hold a trade longer and not panic-sell during a market’s volatile periods.

Holding Period: The length of time between when an asset is bought and sold. Put another way, it is how long a trader has stayed in a trade.

Inflow/Outflow: When cryptocurrency is being deposited on exchanges, that is inflow. When it is being withdrawn from exchanges and moved to wallets, that is outflow. Outflow tends to happen during bull markets. As the cryptocurrency moves into wallets, the currency becomes more scarce, which makes it become even more valuable. Inflow tends to happen at the start of bear markets when traders try to reduce their losses and move their cryptocurrency onto the exchanges from their wallets. With the increase of the cryptocurrency on the exchange, there is more supply, and the price of the cryptocurrency decreases.

Interledger Protocol: A set of rules governing how computers in blockchain ledgers send money through different networks.

Inverse Future: Perpetual futures contract settlements are sometimes referred to as “inverse futures contracts” because the cryptocurrency is being used as the base currency, and therefore settlement is handled in that currency, as opposed to being settled in USD.

Key: Keys are needed to access, store, send, and receive cryptocurrency. There are two kinds of key – public and private. A public key is similar to a bank account number. It simply provides an address – there is no risk of anyone accessing an account’s money with it. A private key, however, is comparable to a bank account’s password. It is the private key that must be kept secure. Both types of key are kept in crypto wallets.

Leverage: Leverage is a mechanism used in trading which involves borrowing funds to increase your purchasing power.

Limit Order: A limit order is a type of order sent to the exchange to buy or sell an asset at a specified price or better. A Buy Limit Order is executed at the limit price or lower, whereas a Sell Limit Order is executed at the limit price or higher.

Liquidation: If a trader loses all or part of their initial margin on a leveraged position, then the crypto exchange may close that position. This is a forced liquidation. Essentially the trader has failed to sustain the funds needed to keep the position open.

Liquidity: Liquidity is how easy it is to convert one asset into another without there being any impact on its price. Essentially, it is how easily one can buy or sell the asset. For example, cash is the most liquid asset since it can easily be converted into different assets by buying those assets. Something like a rare artifact or real estate would not be very liquid (they are “illiquid”) because they may not be easy to sell.

Liquidity Mining: When users lend tokens to a decentralized exchange so the exchange can increase its liquidity, the users get token rewards or a percentage of trading fees or tokens.

Liquidity Protocol: Provides liquidity to protocols through digital assets locked in smart contracts. See also: AMM

Long: Going “long” means to enter a trading position in the hopes for, and benefits from, an increase in the price of an asset. Opposite of Short.

​​Margin: Margin is the collateral a trader puts down so that they can borrow money from an exchange to use toward a trade. The borrowed money allows a trader to place trades at a higher level than they could with their own money, thus giving them leverage.

Market Microstructure Analysis: A kind of technical analysis that provides insight into market momentum and sentiment by studying such things as trading mechanisms and how they impact the price formation process and trader behavior.

Market Order: An order sent to an exchange to buy or sell an asset at the current market price.

Market Sentiment Data: Used in technical analysis, this is information about investors’ broader emotional perception towards the general market or a specific asset. Getting a sense of a market’s general tone about an asset entails analyzing social media channels, industry news, activity on niche forums, and Google Search. Specific data points used for gleaning information are social engagement, spam volume, unique mentions of a cryptocurrency, overall sentiment (bullish/bearish), developer activity on GitHub, and Google Search volume.

Market Timing: A strategy that entails making a plan for calculating risk and reward levels prior to entering or exiting a trade, and using those levels as a guide to enter/exit the position at the best price, be it at profit or loss.

Matching Engine: The part of a digital exchange that stores traders’ orders and matches bids and asks. This lets traders buy and sell at market prices. The matching engine organizes orders by whether or not they are bids or asks, as well as by timing and price. When the engine finds the correlation between asks and bids, it executes a deal.

Mid to Long-Term Investing: A method in which the trader holds their trades over a period of weeks to months. This approach works best for long-term investors who are familiar with portfolio management and rebalancing. As in portfolio management, the trader calculates their risk-reward ratio and asset allocation on investments based on holding periods of the aforementioned several weeks to months.

Mining: Mining is how certain cryptocurrencies produce new coins and verify transactions. The process entails drawing on an immense, decentralized computer network. The computers in the network compete to be the first to validate a group of transactions called a “block,” and to add that block to the blockchain. They do this by solving extremely complicated mathematical problems, and the computers doing this are not only expensive and sophisticated, but also use a lot of processing power and electricity. The owners of these computers – the miners – are compensated for all these expenses by receiving payment in the cryptocurrency, as well as transaction fees. Essentially, miners keep the blockchain running and secure, the blockchain rewards the miners with coins, and the payments are what keep the miners interested in the ongoing maintenance of the blockchain.

Momentum Trading: A strategy where traders take advantage of market volatility and short-term fluctuations in price. Momentum traders buy when they think an uptrend is starting and sell at the highest point before the price drops.

Multisig Wallet: A crypto wallet that operates with multi-signature addresses, requiring more than one signature to approve any transaction. Used by exchanges, brokers, and crypto companies to provide security.

News-based Trading: News-based trading entails making your moves based on news and how the market reacts to that news.

Node: A node is a computer connected to the blockchain network that is used to store, transmit, and process data. A node is an important part of a blockchain network because it is responsible for the validation and verification of transactions, the storage of data, and the synchronization of data across the network. Nodes can be used for various functions, from mining to validating transactions and producing new blocks.

NFT: NFTs are unique tokens that are used to represent a digital asset such as a piece of art, a game item, a collectible, or other digital content. These tokens are stored on a blockchain and are immutable, meaning they cannot be copied. The artist or creator of the asset creates the NFT and assigns it a unique identifier which can then be used to track and verify ownership. This makes it possible for buyers to purchase and trade digital assets with the assurance that they are the sole owner.

On-chain Analysis: A form of technical analysis that gives insight into what’s happening in a blockchain network. With on-chain analysis, traders look at utilization, transactional activity, and asset distribution on a blockchain. The typical metrics used are active wallets, transaction volume, whale movements, miner and exchange inflows or outflows, smart contract interactions, as well as realized and unrealized profit or loss of network participants.

Open Interest: Open interest is the number of outstanding, non-settled derivative contracts. It represents the total number of bought or sold contracts (not the sum of both). If open interest is increasing, it means money is coming into the market. If open interest is declining, then money is exiting the market.

Oracle: Oracles are entities that connect blockchains with off-chain data, allowing the associated smart contract(s) to execute at specified data inputs/outputs. Essentially, oracles allow off-chain and on-chain data to connect and interact.

Order Book: An electronic list of an exchange’s buy and sell orders for a particular asset. Order books are organized by price level, and show the relationships between buyers and sellers in real time by showing the outstanding orders.

Order Book Analysis: A kind of technical analysis that provides traders with insights into market momentum and sentiment. Order book analysis helps with understanding the current market activity of a specific trading pair. Traders usually look at trading volume, bid-ask spread, and order book depth to get a sense of current market structure and activity, while looking at order flow allows traders to identify buy and sell pressure.

Order Book Depth: Order book depth is the number of price levels available at a given time in the order book. The deeper the depth, the greater the number of price levels available for traders to close their bids or asks.

Order Flow: Order flow is reading the buy and sell demand in the order book. It’s useful for scalpers who want to enter a lot of short-term trades for a few points each time.

Pending Order: An order waiting for its parameters to be met to trigger.

Perpetual Futures: An agreement to buy or sell an asset at a predetermined price at some point in the future. Unlike in traditional financial markets, perpetual futures do not have specified expiry dates. This allows a trader to hold a contract for an indefinite period of time.

PnL: An abbreviation for “profit and loss.” It’s the consolidated data of your portfolio which reflects your current financial position.

Portfolio Management: Portfolio management is assembling and maintaining a collection of investments to meet one’s financial goals. Active portfolio management entails strategically buying and selling in the hopes of beating the market. Passive portfolio management involves essentially copying the makeup of an index in an effort to match the market.

Position: The amount of an asset a trader owns upon making a purchase with a buy order.

Position Management: Position management is about evaluating the trades currently held (i.e., positions), observing the market, and deciding upon the best course of action. Position management is used by traders to improve the risk management of their positions across different assets and to build coherent entry and exit strategies.

Position Size: The amount of money a trader has in a particular trade (or portfolio) represented as a percentage of the trader’s total amount of money.

Position Sizing: Position sizing is used by traders to determine the size of a trade to take on. It helps traders avoid devoting too much cash to losing trades and allocating too little capital to winning ones. It also helps traders to figure out how many assets they can buy while staying within risk parameters to maximize profits. Additionally, proper position sizing helps to manage portfolio risk and protects many new traders from substantial losses. The rule of thumb is not to use more than 5% of investable cash per trade.

Position Trading: Position trading calls for finding trends to follow. Traders zero in on a trend and find an investment that can grow from that trend. They then purchase the investment and hold it until the trend reaches its apex. This technique requires figuring out in advance the right entry and exit prices, and employs stop-loss orders to manage risk.  

Protocol: Protocol is a set of rules that establish how computers share information.

Private Key: In blockchain technology, a private key is a secret piece of data that proves your right to spend the cryptocurrency associated with a particular address. It is a 256-bit long number which is picked randomly as soon as you make a wallet. The private key is used to sign transactions and prove ownership of the funds. It is important to keep the private key secure and not share it with anyone else.

Range-based Trading: Range-based trading entails identifying support and resistance zones in an asset’s price movement and then trading depending on what happens in this range.

Rebalancing: Rebalancing is the periodic buying and selling of assets to redistribute how much of a trader’s portfolio is invested in particular assets. It is a strategy for managing risk. It often means ensuring that there is a mix of diverse assets so that there isn’t overexposure to any specific asset.

Scalping: A technique that concentrates on making money from small price swings. With scalping, traders make small moves over and over. In a short time, traders can conduct many transactions while searching for minute price changes and market inefficiencies. It’s a short-term strategy built on the idea that making tiny, frequent gains can result in big returns.

Scaling Out: It is one of the many effective exit strategies. Similar to Dollar Cost Averaging, you can use tiered orders to average your exit price. While scaling out of a position, sell orders are placed at different price points above your entry price and get gradually hit once the price moves up further. A tiered exit decreases the possibility of missed profits when unexpected price reversals occur. Especially over the course of hectic market periods, scaling out of a position helps to time a good exit in constantly changing market conditions.

Seed phrase: A seed phrase, also known as a mnemonic phrase, is a set of words that are used as a recovery phrase for a blockchain wallet. Seed phrases are typically made up of 12-24 words and can be used to generate the cryptographic keys needed to access a user’s cryptocurrency funds.

Sell Order: When a trader places a sell order in an order book, they are telling the exchange that they want to sell an asset at a certain price (or higher, if possible). Opposite of Buy Order.

Short: Going “short” means to enter a trading position in the hopes for, and benefits from, a decrease in the price of an asset. Opposite of Long.

Slippage: Slippage is the difference between an order’s expected price and the price when the order is actually filled. Since crypto is highly volatile, slippage occurs regularly on less liquid exchanges. Liquidity plays a major role in slippage, as more liquidity decreases slippage.

Smart Contract: Smart contracts are digital, self-executing contracts in which the terms of the agreement (e.g. what one party is offering, the details of the other party accepting, etc.) are written into the code. The agreement/code are sent across a distributed, decentralized blockchain network, and it becomes trackable and irreversible. Smart mechanisms allow for anonymous parties to make transactions without relying on a legal system or an external, central authority.

Spread: Spread is the difference between the highest bid and the lowest ask offer prices quoted for an asset.

Stablecoin: A cryptocurrency that has its value tied to a stable asset such as gold or the US dollar. The idea behind a stablecoin is for it to serve as an alternative to move volatile cryptocurrencies like Bitcoin (BTC), and therefore be useful as a day-to-day form of digital money that is better for common transactions. 

Stop-loss Order:  A pending order set to trigger to close out a trade at a trader’s desired price when the markets take an unexpected turn and the trader wants to limit losses.

Stop-Loss and Take-Profit Orders: A stop-loss order helps you to determine your risk ratio and the amount of money you are willing to lose in a single trade. On the other hand, a take-profit order helps you to define a price point at which you want to take profits. Combined with a good evaluation of support and resistance levels, both order types can be used efficiently to set your risk/reward ratio before going into a trade. 

Support and Resistance Levels: These are technical analysis concepts used in market timing. They are predetermined price levels of an asset at which the price will tend to stop and reverse. These levels are met when multiple touches of a price have happened without a breakthrough of the level. Support is the point at which the price stops falling and rises again. Resistance is where the price stops going up and drops back down again. Support levels are good entries for long positions and resistance levels are good entries for short positions.

Swing Trading: This trading technique is about trying to profit from short-term price swings, hence its name. For simplicity’s sake, “short-term” is defined here as a time period ranging from hours to days.  Swing traders figure out where a coin’s price is probably going. Then, they open a trade, and, once the price has (ideally) moved to the predicted price, they snag the profit.

Take-profit Order – A pending order set to trigger at thet trader’s desired price to close the position with a profit.

Technical Analysis: The process of analyzing a security’s price movement based on its historical data and performance.

Token: Generally speaking, a “token” is a cryptoasset or cryotocurrency. However, it can have several other meanings. For example, although Bitcoin and Ether are, strictly speaking, tokens, usually when one uses the term “token,” they mean cryptocurrencies other than Bitcoin and Ether. Another meaning of “token” is a cryptocurrency that does not have its own native blockchain the way Bitcoin and Ether do, and thus runs on someone else’s blockchain. Beyond working as a cryptocurrency, tokens can have other uses. They can serve as currency and/or collateral on a decentralized finance (DeFi) platform, function as incentive rewards for investors in a DeFi project, signify ownership of a digital asset (this is called a non-fungible token, or NFT), or function as a signifier of voting rights on a crypto project (known as a governance token), among other uses.

Tokenomics: “Tokenomics” is a word formed from the merging of “token” and “economics.” It refers to the factors that influence a token’s use and value. This includes how the token is created and distributed, the supply and demand, its utility, any incentives there might be for token holders, and so forth. Studying tokenomics is a way to understand where a cryptocurrency is getting its value from and whether that value is likely to increase or decrease over time.

Trading: Speculation on an asset’s price to make a profit.

Trading Frequency: Trading frequency is how many trades are executed in a particular period of time.

Trailing Stop: A trailing stop is a tool traders use to protect their gains and limit their losses when a trade doesn’t go in the direction they want. Basically, a trader places an order that “trails” behind the market price by pre-determined amount. It keeps following the price as long as the price is going in the direction the trader wants. But, if the price starts to move in the unwanted direction, the trailing stop no longer follows, but rather stays in place. If the market price either moves toward the trailing stop by a certain amount (or, actually hits the trailing stop, depending on what the trader has pre-set), then the trailing stop order is activated and the trade is executed at market price.

Trading Pair: See Currency Pair

TVL: An acronym for Total Value Locked, which is the sum of all assets locked in a particular protocol.

Volume – The total amount of currency traded in a 24-hour period

Wallet: A cryptocurrency wallet stores your public and private keys and enables you to access your crypto, as well as to send, receive, and spend it. Wallets can be physical devices (that often look like USB drives) or digital applications.

Wash Trading – Wash trading is a form of market manipulation in which an investor simultaneously buys and sells the same financial instrument in order to artificially inflate the trading volume and create a misleading impression of market demand. 

Whale: A person(s) or entity who holds or trades a large amount of cryptocurrency. The holdings are potentially large enough to give the whale the ability to affect the currency’s price.

Weak Hands: Weak hands is a term often used to describe traders and investors who lack conviction, confidence in their strategies or the resources to go ahead with their trading plans.

Wick: The part of the candlestick that hangs down below the body is called the wick. It represents both its high and low points over a specific period.