A working glossary of crypto, exchange, and algorithmic-trading terms — written for Australian retail traders, with Australian-specific context where it matters.

A

AFSL (Australian Financial Services Licence) — the licence required by ASIC to deal in, advise on, or provide market-making for financial products. Spot crypto isn’t a financial product; derivatives generally are.

Algorithmic trading — strategy execution by software according to pre-defined rules. Distinct from a “bot” only in convention; algos tend to be custom-coded, bots tend to be off-the-shelf. More.

API key — a credential pair (public key + secret) used by a bot or app to authenticate to your exchange account. Best practice: trade-only permissions, no withdrawal, IP allowlist, rotated periodically.

ASIC — Australian Securities and Investments Commission. Regulates financial products, including most crypto derivatives.

ATO — Australian Taxation Office. Treats crypto as property; most retail disposals are CGT events.

AUSTRAC — Australia’s anti-money-laundering and counter-terrorism financing regulator. Operates the Digital Currency Exchange (DCE) register that crypto exchanges must be on to serve Australian retail.

B

Backtesting — running a strategy against historical price data to measure how it would have performed. Watch for look-ahead bias, overfitting, and unrealistic fill assumptions.

BPAY — Australian bill-payment network. Some exchanges accept BPAY deposits; usually slower than PayID but no fees.

C

CGT (Capital Gains Tax) — the tax payable on the gain when you dispose of an asset. In Australia, individuals holding for 12+ months may qualify for the 50% CGT discount. More.

Cold storage — keeping private keys offline (hardware wallet, paper wallet) to reduce hack risk. Standard practice for any meaningful holding.

Copy trading — automatically replicating another trader’s trades on your account. You inherit their strategy and their risk profile.

D

DCA (Dollar Cost Averaging) — buying a fixed AUD amount on a fixed schedule regardless of price. Reduces timing risk; widely automated by bots. More.

DCE (Digital Currency Exchange) — AUSTRAC’s term for a crypto-fiat exchange operating in Australia.

DeFi — decentralised finance. Smart-contract-based protocols that replicate banking functions (lending, swapping, liquidity provision) without a central operator. Tax treatment in Australia is often unclear; get specialist advice.

F

FIFO (First-In, First-Out) — a method for assigning cost base to disposed crypto: the units sold are deemed to be the ones bought first. The default the ATO accepts unless you elect another consistent method.

Fiat onramp / offramp — converting AUD to crypto and back. Onramp speed and cost is one of the most-overlooked exchange differentiators for Australian users.

G

Grid bot — a bot that places staggered buy and sell orders within a price range, profiting from oscillation. Works in sideways markets, fails badly in strong trends. More.

K

KYC (Know Your Customer) — the identity-verification process exchanges run before letting you deposit fiat or trade. Required by AUSTRAC for any registered DCE.

L

Liquidity — how much you can buy or sell without moving the price. Thin liquidity means your $5,000 trade pushes the market 1%; deep liquidity means it doesn’t budge.

Look-ahead bias — a backtesting flaw where the strategy uses information it wouldn’t actually have had at decision time (e.g. close-of-bar data while the bar is still forming). Almost always inflates apparent performance.

M

Maker / Taker — order book economics. A “maker” adds liquidity (limit order that doesn’t fill immediately); a “taker” removes liquidity (market order or aggressive limit). Most exchanges price makers cheaper.

Market making — placing both bids and asks to profit from the spread. Specialist activity; sensitive to fees and operational latency.

O

OSKO / NPP / PayID — Australia’s near-real-time bank transfer network. Most major Australian exchanges support PayID/OSKO for AUD deposits, often with no fee.

Overfitting — tuning a strategy until the backtest looks great. The strategy is fitted to historical noise; live performance is much worse. Out-of-sample testing helps detect this.

P

Paper trading — running a strategy live but with simulated money. Validates that data feeds, execution, and exchange API behave as your backtest assumed before real capital is deployed.

Pine Script — TradingView’s domain-specific language for indicators and strategies. Approachable; starter guide.

Proof of reserves — cryptographic attestation by an exchange that they hold the assets they claim to hold on customers’ behalf. Implementation quality varies; presence is good, presence with regular audit by a reputable third party is much better.

S

Slippage — the difference between the price you expect and the price you actually get. Bigger orders, thin books, and fast markets all increase slippage.

Spread — the gap between the best bid and best ask. Tight spreads = liquid market; wide spreads = thin market.

Stablecoin — a token pegged to a fiat currency or basket. USDT, USDC, AUDC, AUDD. Issuer credit risk is real; “$1 of stablecoin” is not the same as “$1 in a bank”.

Staking — locking up tokens to support a proof-of-stake network in exchange for rewards. Rewards are typically ordinary income at receipt for Australian tax purposes.

T

TWAP / VWAP — execution algorithms that split a large order into smaller pieces over time (TWAP) or weighted by volume (VWAP) to reduce market impact.

W

Webhook — an HTTP callback that a service sends when an event happens. TradingView alerts can fire webhooks to most major exchanges (directly or via a bridge), enabling code-light algorithmic execution.

Withdrawal allowlist (whitelist) — a list of pre-approved external wallet addresses for withdrawals. Reduces blast radius if an account is compromised. Turn it on.

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