Glossary
Essential concepts explained in plain language — with short videos where available.
25 video explainers
Video Explainers
API Key
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.
Asset Convexity
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.
Black Swan Event
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.
Coin Control
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
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.
Derivatives
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.
Drawdown
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.
Fees Involved
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
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.
Funding Fees / Funding Rates
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.
KYC (Know Your Customer)
The regulatory process where exchanges verify your identity using a government ID and selfie.
Leverage
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.
Liquidation / Margin Call
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.
Maker / Taker Fees
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.
Mark Price
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.
PnL (Profit and Loss)
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.
Proof of Reserves
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.
Risks of using Sequence
Trading with Sequence carries four kinds of risk: algorithmic/market risk, exchange counterparty risk, protocol risk, and client self-trading risk.
Slippage
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.
Spot Trading
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.
Stablecoin
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.
Stop Loss
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
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.
Trading Pair
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.
Volatility
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.