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Crypto Terms:  Letter T
Jun 19, 2023 |
updated Apr 02, 2024

What is Trading Tournament?

Trading Tournament Meaning:
Trading Tournament - is a trading event held by crypto exchanges where users are encouraged to trade in order to reap rewards.
3 minutes

Let's find out Trading Tournament meaning, definition in crypto, what is Trading Tournament, and all other detailed facts.

Trading Tournaments are campaigns organized by cryptocurrency exchanges where their participants compete for the best rewards by putting their crypto knowledge to the test and trading. 

There is no set format for trading tournaments. Therefore, each one is different and allows users to try out various trading strategies and techniques. 

While the trading tournaments can be quite different, the rewards usually stay the same. The most popular one is to give participants the highest trading volume of a certain cryptocurrency for the tournament.

During trading tournaments, participants usually have to pick a cryptocurrency, monitor and make predictions regarding its price movements, and make trading decisions based on previous speculations. An authorized exchange or a contract for a difference (CFD) trading account is employed for buying and selling.

Cryptocurrency projects, especially new ones, benefit from trading tournaments since they attract a lot of new users thus creating a perfect opportunity for introducing a new coin, token, or another project. They also act as an incentive for trading.

In order to participate in a trading tournament, you should have a clear understanding of these terms: 

  • Leverage. It defines a type of loan that an investor can take in order to get a better position in margin trading. However, it’s important to keep in mind that engaging in this type of trading is very risky. In essence, leverage greatly increases the investor's purchasing power;
  • Trading Volume. It established the amount of cryptocurrency that’s been traded within a single day. It changes crypto trends;
  • Margin. Let’s say you have to pay 20% of the total value for a token that’s worth $5000. That 20% which translates to $1000 is the margin that you’ll have to pay. In other words, it refers to the first investment a user makes to open and maintain a leveraged position;
  • Spread. It determines the difference between the highest price the buyer can pay and the lowest price the seller can accept for a certain cryptocurrency. Let’s say a buyer offers $60 for a new cryptocurrency, but the seller doesn’t agree and gives a counteroffer of $80. In this case, the seller’s offer of $80 is the spread;
  • Lot. It describes the standardized number of units of the cryptocurrency that’s used for trading. Usually, the number is small since cryptocurrencies are known to be volatile;
  • Pip. A popular measurement unit in foreign exchange markets. A pip 1/100th of 1% within price movement. When it comes to the crypto sector, pips are used to tag price fluctuations of single digits.

In essence, a trading tournament is a way for users to put their crypto holdings and knowledge to use and make some profit.