Glossary - All terms

These are words you’ll commonly see when you use Sequence.

Trying to understand something that’s not defined here? Ask us in a message — and we can add it to the list 😄

A-C

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.
Alpha 1x: The spot version of Alpha Pro: it trades without leverage, and you actually own the coins. Alpha 1x has no stop-loss — spot positions aren't liquidated.
Alpha 2x: The leveraged version of Alpha Pro: it trades with 2x leverage, which amplifies both gains and losses. Because it uses leverage, it has a stop-loss and can be liquidated. It's funded with BTC as collateral.
Alpha Pro: Sequence's automated trading strategy. It runs on the Fibonacci Trading Engine and comes in two versions ("flavors"): Alpha 1x and Alpha 2x. Both use the same engine and the same rules — the only difference is whether they use leverage.
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▶ video: A unique access code your exchange gives you that lets Sequence place trades on your behalf — without ever being able to withdraw your funds. Think of it as a permission slip with a few specific powers turned on, and the dangerous ones turned off.
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.
Asset Convexity▶ video: The risk that comes from holding Bitcoin as collateral for a dollar-priced derivatives trade. When a price drop hits you twice — once on your trade, once on the collateral backing it — because both are tied to the same asset. The losses stack and accelerate faster than you'd expect. That's the curve in convexity.
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.
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.
Black Swan Event▶ video: An extremely rare, extremely impactful event that's almost impossible to predict — but easy to explain in hindsight. The COVID crash, FTX collapse, and TerraLuna implosion are all crypto black swans.
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.
BTC Accumulation: A strategy designed to accumulate Bitcoin through trading.
Bull Market: A market condition where asset prices are rising or are expected to rise, often driven by positive sentiment and strong economic indicators.
Bybit: The preferred exchange for Sequence due to its high liquidity, robust security measures, and proof of reserves. Used extensively for derivatives trading.
Capital pool: Inside a single Alpha Pro instance, the seven coins it trades share ONE pool of money. The instance moves capital between those coins from that shared pool — you don't fund each coin separately.
Coin Control▶ video: An advanced Bitcoin wallet feature that lets you manually pick which UTXOs (chunks of Bitcoin from past transactions) to spend. Useful for privacy and fee optimization, but not necessary for everyday users.
Collateral▶ video: The money or crypto you put up as a guarantee when trading derivatives. It's the down payment that backs your position. If the trade goes against you, your collateral covers the loss until it runs out.
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.
Counterparty Risk: The risk that the other party in a financial transaction may not meet their contractual obligations, leading to potential financial loss.

D-F

Derivatives▶ video: Financial contracts whose value comes from the price of an underlying asset, like Bitcoin, without you actually owning the asset. They let you gain exposure to a price movement through an agreement, instead of through ownership.
Digital Assets: Tokens, cryptocurrencies, or any digital content that holds value and can be owned or transferred. Common examples include BTC, ETH, and NFTs.
Diversification: A risk management strategy that involves spreading investments across multiple assets, exchanges, and strategies to minimize potential losses.
Dollar-Cost Averaging (DCA): Spreading your purchases out over time instead of making one big bet. Sequence goes further — the new-generation strategies combine algorithmic signals with DCA, buying more aggressively when prices drop and selling when they recover, instead of buying blindly on a schedule.
Drawdown▶ video: The temporary drop in a trading account's value from its highest peak to its current low. Every strategy has drawdowns — what matters is the maximum size you should mentally prepare for, and whether you can hold through them without panic-selling.
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 Counterparty Risk: The risk associated with the solvency and reliability of a cryptocurrency exchange, where issues may prevent the fulfillment of transactions or withdrawals.
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.
Fees Involved▶ video: There are four kinds of fees in any automated trading service: exchange trading fees, funding rates on derivatives, blockchain withdrawal fees, and the platform's service fee. Three are charged by the exchange, one by the platform — see the pricing page for the current service fee structure.
Fibonacci Trading Engine▶ video: Sequence's proprietary trading engine. The algorithmic system that powers every Sequence strategy, refined over six years of live trading. It runs multiple strategies in parallel, each tuned for a different goal but built on the same DNA.
Financial Node▶ video: Sequence provides you with your own sovereign trading environment. A trade-execution engine that enables a secure bridge to your exchange and brokerage accounts. It isn't a shared platform; it is a self-governed, Financial Node. Our architecture ensures that only you and only you, have authority and control over your assets. When you create a Sequence account you are creating a dedicated trading instance, provisioned on Google Cloud, exclusively for your use. A high-performance environment engineered for institutional-grade trading. Within this isolated node, you connect your exchange account via API credentials that you create. These permissions are strictly-trade only and function as a secure, encrypted bridge between your private trading server, Sequence, and your chosen exchange or brokerage. No other person has the technical capacity to view, export, or access your credentials. This creates a Zero-Touch Environment with direct connectivity. Your own private node communicates straight to your exchange, minimizing latency by removing third-party intermediaries. You can get started in just a few minutes. All you need to do is sign-up, connect your exchange account via API keys, choose your desired strategy and settings, and launch!
Fintech (Financial Technology): The application of technology to enhance and automate financial services, streamlining operations and improving user experience.
Forex Trading: A strategy that capitalizes on volatility in the foreign exchange market to generate returns.
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.
Funding Fees / Funding Rates▶ video: Periodic payments that flow between long and short positions on perpetual contracts to keep the contract price aligned with spot. You might pay or receive depending on which side you're on.

G-I

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.
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.
Inverse Perpetual Contract: A perpetual derivatives contract priced in dollars but settled in Bitcoin. You hold BTC as collateral, you risk BTC, and any profit lands as more BTC. It's the only way to grow a Bitcoin stack via derivatives without ever touching dollars.
IP Whitelisting: A security protocol that designates specific IP addresses as trusted, allowing them access to a system or API while blocking unauthorized connections.

J-L

KYC (Know Your Customer)▶ video: The regulatory process where exchanges verify your identity using a government ID and selfie.
Leverage▶ video: Trading with borrowed money so you control a position bigger than your actual capital. It amplifies both profits and losses in equal measure. Some of Sequence's strategies use conservative leverage — far below what exchanges allow — so the system has room to absorb adverse moves before risk becomes meaningful.
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.
Linear Contract: A perpetual derivatives contract where both the price and the collateral are denominated in the same currency, usually a stablecoin like USDT.
Liquidation / Margin Call▶ video: When a derivatives trade loses so much that the exchange forcibly closes the position to recover collateral. Sequence's strategies use safety buffers and low leverage to stay miles away from liquidation.
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.

M-O

Maker / Taker Fees▶ video: Two kinds of exchange fees. A "maker" adds liquidity to the order book by placing limit orders and pays a lower fee. A "taker" removes liquidity by placing market orders and pays a slightly higher fee. Sequence uses limit orders whenever possible to qualify for the lower tier.
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.
Mark Price▶ video: A smoothed reference price that exchanges use to calculate unrealized profit and loss on derivatives positions. Unlike the "last price" on the chart, the mark price pulls data from multiple sources to be harder to manipulate.
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.
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.
Minimum Required Balance: The minimum capital necessary to activate a specific trading strategy. The amount varies by product.
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.
Net Long BTC: A trading position indicating a positive net exposure to Bitcoin to capitalize on BTC price appreciation.
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.

P-R

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.
Passphrase: An additional layer of security used alongside API keys and secrets. Enhances account protection by requiring a complex password.
Perpetual Derivatives Markets: Derivatives markets without expiration dates, utilized in multiple Sequence strategies.
PnL (Profit and Loss)▶ video: Comes in two flavors: "unrealized" is the gain or loss on positions still open (changes constantly); "realized" is locked in when you actually close a trade. Track both: unrealized is the heat of the moment, realized is what the account actually earned.
Position Size: The quantity of a specific asset or security held in a trading account. Crucial for risk management and strategy optimization.
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▶ video: A method exchanges use to publicly demonstrate they actually hold the customer funds they claim to hold. The most rigorous version uses a Merkle tree so customers can verify their own balance is included. Sequence only works with exchanges that publish proof of reserves.
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.
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.
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.
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.

S-U

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.
Security Breaches: Incidents where unauthorized entities gain access to cryptocurrency exchanges, potentially leading to data theft or financial loss.
Slippage▶ video: The gap between the price you expected and the price you actually got when placing a market order. The bigger your order or the thinner the market, the worse it gets.
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.
Spot Market: Market where financial assets are traded for immediate delivery, used in strategies like Spot Accumulation.
Spot Trading▶ video: Buying or selling an asset at the current market price for immediate delivery. When you spot-buy Bitcoin you actually own it — no contracts, no expiry, no margin. Just clean ownership.
SSL Encryption: Secure Socket Layer encryption that protects data transmission, particularly for API keys. Ensures that sensitive information remains confidential during network transfers.
Stablecoin▶ video: A cryptocurrency designed to hold a fixed value, usually one US dollar, by being backed by real reserves. USDT and USDC are the leading examples. They let you stay in crypto without exposure to crypto volatility — but carry depeg and counterparty risk.
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.
Stop Loss▶ video: A pre-set order that tells your exchange to automatically close a position if the price drops below a certain level. It's an emotional safety net and a risk management tool that caps how much you can lose on a single trade.
Sub-Account▶ video: An isolated account inside your main exchange account, with its own balance, history, and API keys. Every Sequence strategy must run in its own dedicated sub-account to keep funds separated and prevent manual trades from confusing the algorithm.
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.
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
Trading Pair▶ video: Two assets you're swapping back and forth on an exchange, like BTC/USDT. The first asset is what you're buying or selling, the second is what you're using to buy or what you receive when you sell. Sequence only trades pairs with deep liquidity.
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.
USD Accumulation: A strategy designed to generate returns in USD using stablecoins to trade in derivatives markets. Balances yield generation with risk management.
User Account Custody: Funds remain in the user’s account, while Sequence operates through read-only API keys for secure order placement.
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.

V-Z

Volatility▶ video: How much an asset's price moves up and down over time. While most investors fear volatility, Sequence's strategies need it — our algorithm's goal is to profit from buying dips and selling rallies, and bigger price swings mean more opportunities.
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.
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.
Withdrawal: The process of moving funds from a trading account to another crypto account, or personal bank account or crypto wallet.