Glossary

🤓 Welcome!

This glossary provides a comprehensive list of financial terms, trading strategies, and technical concepts used at Sequence. It is designed to help users understand the language commonly used within the platform, particularly when dealing with algorithmic trading, derivatives, and strategy management.

For everything that is not clear or comprehensively explained, we strongly advise DYOR with an LLM like ChatGPT :)

Thematic Index

1. Algorithms and Strategies
2. Platform Features and Processes
3. Financial Concepts
4. Security and Risk Management
5. Trading and Market Terms

• Inverse Derivatives Trading: An inverse derivatives strategy trades perpetual futures contracts where the base currency (e.g. BTC) is used as both collateral and settlement. For example, in a BTCUSD inverse contract, gains and losses are denominated in BTC.

This type of strategy allows traders to gain leveraged exposure - up to 2x in our algorithms- to price movements of the underlying asset (e.g. BTC), aiming to grow the base asset over time. It is best suited for advanced users comfortable with derivatives, volatility, and margin risk.

• Algorithmic Trading: The use of computer programs to automatically execute trades based on predefined rules or algorithms. Example: Running a DCA (Dollar-Cost Averaging) strategy via API-based trading without manual intervention.
• Backtested Strategy: A trading strategy that has been engineered and tested using historical data to assess its potential performance. Helps validate algorithm efficiency before live deployment.
• BTC Accumulation: A strategy designed to accumulate Bitcoin through trading in the derivatives markets with leverage -up to 2x in our algorithms). Focuses on gradual accumulation while managing risk.
• Dollar-Cost Averaging (DCA): Traditionally, DCA is an investment approach where a fixed amount is invested at regular intervals, regardless of the asset’s price, to reduce the impact of volatility and improve the average entry cost over time. In our strategy, a more advanced DCA mechanism is used: position sizes are dynamically adjusted during price declines to optimize average entry, taking advantage of volatility to maximize returns, and accelerate recovery during market reversals.
• Diversification:  A risk management strategy that involves spreading investments across multiple assets, exchanges, and strategies to minimize potential losses.
• Fibonacci Trading Engine: The core algorithm that calculates optimal entry levels and profit-taking points by analyzing market volatility. Designed to maximize trade efficiency through data-driven decisions.
• Forex Trading: A strategy that capitalizes on volatility in the foreign exchange market to generate returns. Offers flexibility with BTC as a withdrawal option.
• High-Frequency Trading (HFT) Activity: A trading method characterized by the rapid buying and selling of assets within short timeframes, often leveraging algorithmic systems to capitalize on minimal price fluctuations.
• Manual Trading: The process of executing buy and sell orders manually, based on human judgment rather than automated algorithms. In Sequence, manual trading is not permitted. We require dedicated sub-accounts used to run our strategies, as it may interfere with algorithmic operations and strategy integrity.
• Net Long BTC: A trading position indicating a positive net exposure to Bitcoin to capitalize on BTC price appreciation.
• Scaling into Positions: A trading strategy that involves gradually entering a position by buying or selling in smaller increments. This approach reduces the impact of market volatility and spreads risk.
• Smart Sizing: A dynamic approach to adjusting the trade size based on current market volatility. Ensures optimal position sizing to balance potential returns and risk exposure.
• Spot Accumulation: A yield generation strategy that uses stablecoins to trade in spot markets, primarily aimed at accumulating USD. It takes advantage of short-term price movements.
• Trading Bots: Automated software applications designed to perform specific tasks without human intervention. In trading, bots execute buy and sell orders based on pre-defined parameters and market conditions, optimizing trading efficiency and minimizing manual effort
• USD Accumulation: A strategy designed to generate returns in USD using stablecoins to trade in derivatives markets. Balances yield generation with risk management.

• API (Application Programming Interface): A standardized set of protocols that enables different software applications to communicate seamlessly. Critical for integrating Sequence with external trading platforms and data sources.
• API Key: Unique identifier that authenticates and authorizes access to an API, allowing secure interaction between systems.
• API SECRET:  A confidential code paired with an API key, providing secure access to Sequence’s API. Must be kept private to protect account integrity.
• Bybit: The preferred exchange for Sequence due to its high liquidity, robust security measures, and proof of reserves. Used extensively for derivatives trading.
• Coin Control: An advanced feature in some cryptocurrency wallets that allows users to manually select which UTXOs (Unspent Transaction Outputs) will be used in a transaction. This enables more precise management of coin selection, improving privacy and optimizing transaction fees. In the context of Sequence, it is recommended to configure Coin Control when managing BTC transactions to enhance control over inputs.
• Funding Account: A specific wallet within Bybit where funds are deposited before being moved to a trading sub-account. Used primarily for receiving deposits and withdrawals, separate from the trading capital to minimize exposure.
• Invoice: A formal document issued by a business to a client, specifying the services or products provided and the total amount payable. Essential for transparent financial transactions.
• Risk Meter: Indicator that shows the risk level associated with each strategy, helping users make informed decisions.
• UTA (Unified Trading Account): A type of account on Bybit that consolidates multiple assets into a single wallet, allowing users to trade across spot, derivatives, and other markets without transferring funds between sub-accounts. Enhances flexibility and efficiency in trading operations.
• Wallet: A digital application or hardware device used to store, manage, and transact cryptocurrencies. Wallets generate private and public keys, allowing users to securely access and control their digital assets. In trading, wallets are essential for holding funds before moving them to exchange accounts.
• Withdrawal: The process of moving earned funds from an affiliate or trading account to a personal bank account or crypto wallet. Typically follows platform-specific procedures for verification and approval.

• Asset: Any resource with economic value that can be owned or controlled. In Sequence, assets primarily include cryptocurrencies and digital tokens used in trading strategies.
• Affiliate: An individual or entity that promotes Sequence’s products or services in exchange for a commission based on generated sales.
• Blue Chip Digital Assets: High-value cryptocurrencies or digital tokens known for their stability and liquidity, including Bitcoin (BTC), Ether (ETH), Solana (SOL), and stablecoins.
• Bull Market: A market condition where asset prices are rising or are expected to rise, often driven by positive sentiment and strong economic indicators.
• Commission: A fee paid to an affiliate when they successfully refer a new customer or generate a sale. Integral to the affiliate marketing model.
• Currency: Any form of money that is actively used or circulated as a medium of exchange. Common examples include USD, EUR, and BTC in digital trading.
• Derivatives: Financial contracts whose value depends on the performance of an underlying asset, index, or entity. Examples include futures and options.
• Digital Assets: Tokens, cryptocurrencies, or any digital content that holds value and can be owned or transferred. Common examples include BTC, ETH, and NFTs.
• Earning Potential: The estimated income that an affiliate can generate through successful referral activities. Depends on the commission rate and the volume of referred transactions.
• Entry Price: The specific price at which an investor initiates a position by buying an asset or entering a trade. Crucial for calculating potential profit or loss.
• Exchange Fees: Fees imposed by the cryptocurrency exchange (e.g., Bybit) for executing trades, such as maker/taker fees, withdrawal fees, or funding fees. These costs vary by exchange and trading pair.
• Fee: A cost incurred for executing a transaction or using a specific service. In the context of trading, fees are typically categorized as follows:
• Fintech (Financial Technology): The application of technology to enhance and automate financial services, streamlining operations and improving user experience.
• Flagship: The primary or most advanced product that represents a company’s core offering and brand identity. In Sequence, the flagship product often highlights innovation and market leadership.
• Goal-Based Options: An investment approach focused on achieving specific financial goals rather than purely maximizing returns. Strategies are tailored to align with personal objectives, such as retirement planning or wealth preservation, reducing impulsive trading and incorporating risk management based on life priorities.
• Leverage: A multiplier that increases exposure in trades, used in various strategies with different levels (1x, 1.5x + 2x [invite only])
• Liquidity: The ease with which an asset can be converted into cash without significantly impacting its market price. High liquidity indicates stable market conditions, while low liquidity can lead to price slippage.
• Liquidity Constraints: Restrictions on trading volume caused by insufficient market liquidity, making it challenging for larger players to execute substantial trades without moving the market.
• Market Cycles: Recurring patterns observed in financial markets, typically characterized as Bull (upward trend) and Bear (downward trend) cycles. Used to identify potential investment opportunities and risks.
• Monetary Debasement: The reduction in the value of a currency, often triggered by actions from central banks such as increasing the money supply. Leads to decreased purchasing power.
• Mark Price: A calculated reference price used on derivatives exchanges to determine the unrealized profit and loss (P&L) of open positions. Essential for calculating potential liquidation.
• Minimum Required Balance: The minimum capital necessary to activate a specific trading strategy. The amount varies by product, such as $10,000 for Spot Accumulation.
• Passive Cash Flow: Regular income generated with minimal ongoing effort, typically derived from investments or automated trading strategies.
• Passive Income: Earnings generated from a venture or investment without active participation. Examples include staking rewards or rental income.
• Perpetual Derivatives Markets: Derivatives markets without expiration dates, utilized in multiple Sequence strategies.
• Position Size: The quantity of a specific asset or security held in a trading account. Crucial for risk management and strategy optimization.
• Profits: The positive financial gain realized when the revenue from an investment or trading position exceeds the initial cost or expenses. In trading, profits are typically calculated as the difference between the selling price and the purchase price after accounting for fees.
• PnL (Profit and Loss): A financial metric that measures the net outcome of trading activities. Calculated as the difference between the acquisition cost and the current or sale value of an asset. Positive PnL indicates profit, while negative PnL indicates loss. Crucial for assessing trading performance
• Referral System: A marketing approach that incentivizes existing customers or partners to recommend the business’s products or services to others. Successful referrals often result in commissions or bonuses.
• Revenue Share: A model where affiliates earn a percentage of the revenue generated from the clients they refer. This model aligns affiliate rewards with the business’s ongoing success.
• ROI (Return on Investment): A metric that measures the efficiency of an investment by calculating the return relative to its cost. Used to assess the profitability of trading strategies.
• Sequence Fees: Charges applied by Sequence for using its algorithmic trading services. These fees are typically a percentage of the trading volume or profits generated by the strategy.
• Spot Market: Market where financial assets are traded for immediate delivery, used in strategies like Spot Accumulation.

• Black Swan Event: An unexpected, highly impactful event that is difficult to predict and can significantly disrupt financial markets.
• Counterparty Risk: The risk that the other party in a financial transaction may not meet their contractual obligations, leading to potential financial loss.
• Convexity Risk: The risk arising from the non-linear relationship between the price of an underlying asset and the value of its derivative. Managed through advanced trading strategies to mitigate potential losses.
• Exchange Counterparty Risk: The risk associated with the solvency and reliability of a cryptocurrency exchange, where issues may prevent the fulfillment of transactions or withdrawals.
• IP Whitelisting: A security protocol that designates specific IP addresses as trusted, allowing them access to a system or API while blocking unauthorized connections.
• KYC (Know Your Customer): A regulatory process where financial institutions verify the identity of their clients to ensure compliance and reduce the risk of fraudulent activities. Typically involves submitting personal identification documents.
• Merkle-Tree Proof of Reserves: A cryptographic method employed by some cryptocurrency exchanges to verify that they possess the assets they claim. Provides transparency and builds trust with users.
• Non-Custodial Service: A service where the platform does not hold or control users’ funds. Instead, users maintain full ownership and control of their assets, typically through private keys or wallet access. This approach enhances security by minimizing counterparty risk.
• Passphrase: An additional layer of security used alongside API keys and secrets. Enhances account protection by requiring a complex password.
• Private Keys: Secure, unique digital codes used to authorize cryptocurrency transactions and prove ownership of a digital wallet. Must be kept confidential to prevent unauthorized access.
• Proof of Reserves: A verification method used by exchanges to demonstrate that they hold enough reserves to cover all user balances. Helps build user trust and platform credibility.
• Risk Assessment: The process of analyzing potential risks associated with investments, including factors like market volatility, liquidity constraints, and counterparty risk.
• Risk Exposure: The potential financial loss an investor could incur from a particular investment or trading strategy. Important for setting stop-loss limits and leverage levels.
• Risk Management Strategies: Techniques to minimize trading risks, such as scaling into positions gradually, using conservative leverage, and employing methods that reduce dependency on stop-loss orders.
• Read-Only API Key: An API key that grants permission to view data and interact with the account without allowing any trading actions or withdrawals.
• Security Breaches: Incidents where unauthorized entities gain access to cryptocurrency exchanges, potentially leading to data theft or financial loss.
• Stablecoin De-Peg Risk: The risk of a stablecoin losing its fixed value relative to its underlying asset or currency. Can occur due to market instability or lack of sufficient reserves.
• SSL Encryption: Secure Socket Layer encryption that protects data transmission, particularly for API keys. Ensures that sensitive information remains confidential during network transfers.
• Two-Factor Authentication (2FA): An additional security layer that requires two forms of identification, such as a password and a one-time code, to access an account.
• User Account Custody: Funds remain in the user’s account, while Sequence operates through read-only API keys for secure order placement.
• Whitelist: A predefined list of approved entities, such as IP addresses or withdrawal addresses, that are permitted to access a system. Enhances security by limiting unauthorized interactions.
• Whitelist Pairs: A security feature that restricts API trading to specific cryptocurrency pairs chosen by the user. This prevents unauthorized trading by ensuring that only the designated pairs can be traded through the API. Recommended to enhance account security, especially for strategies like Spot USD and BTC accumulation.

• Backtested Strategy: A trading strategy tested on historical data to evaluate potential effectiveness.
• Bear Market: A prolonged period of declining asset prices, typically characterized by pessimistic investor sentiment and reduced trading volume. Often seen as a market correction or downturn, where assets lose a significant portion of their value.
• Bull Market: A period when the overall market is on the rise, leading to an increase in asset prices.
• High-Frequency Trading (HFT): Trading characterized by rapid buying and selling of assets within short timeframes.
• Limit Orders: Instructions to buy or sell an asset at a specified price or better. Used to control entry and exit points without immediately executing at the market price.
• Perpetual Derivatives Markets: Derivative markets that do not have an expiration date, allowing for continuous trading. Frequently used in Sequence strategies for flexible position management.
• Spot Trading: The immediate buying or selling of financial instruments for direct delivery. Often used in trading pairs like BTC/USD or ETH/USDT.
• Spot Market: A market where assets are traded for immediate settlement and delivery. Commonly utilized in strategies such as Spot Accumulation.
• Token Pairs: Combinations of two different cryptocurrencies that can be traded against each other on an exchange (e.g., BTC/USDT). Fundamental for executing spot and derivative trades.
• Traded Balance: The total value of assets held in a trading account, including deposits, profits, and losses. Represents the capital available for active trading.
• Volatility: The extent to which asset prices fluctuate over a given period. A key metric for assessing market risk and determining trade entry points.
• Volatility Clustering Theory: A concept suggesting that periods of high volatility tend to be followed by high volatility, and low volatility by low volatility. Useful for anticipating market behavior.