GLOSSARY
Every term on this site, defined.
The 32 terms that appear across these pages — custody, drawdown, funding rate, Schedule VDA — each defined to stand on its own. If we use a word here that is not on this page, that is a bug in our writing.
HOW THE SERVICE WORKS
How the service works
API key
- A credential that lets one system act on an account in another. AlgoGains uses a key restricted to placing trades; withdrawal permission is disabled at the exchange, and the client can delete the key at any time to end access.
Trade-only permission
- An API key scope that allows placing and cancelling orders but not moving funds. The restriction is enforced by the exchange rather than by the party using the key, so it holds even if that party's systems are compromised.
Custody
- Who legally holds an asset. With AlgoGains, custody sits with Delta Exchange in the client's own account under the client's own KYC; AlgoGains never holds client funds.
Kill switch
- A control that halts all trading on an account immediately. AlgoGains provides one in the client dashboard; deleting the API key at the exchange is the independent equivalent.
Hurdle rate
- A return an account must clear before a performance fee applies. Platinum Managed uses a 14% annual hurdle, charged as a hard hurdle: the first 14% of return is entirely the client's and the 25% fee applies only to the excess, so a year returning 14% or less carries no fee at all.
High-water mark
- A rule preventing a manager being paid twice for recovering the same ground. On Platinum Managed, losses and shortfalls against the hurdle carry forward, so a weak year must be made good before any fee is charged again.
Mandate
- The agreed limits within which an account is traded — risk tolerance, instruments, maximum exposure. Set with the client on the Managed tier; standard and identical for every account on Auto.
RISK AND POSITION MANAGEMENT
Risk and position management
Position sizing
- Deciding how much capital a single trade risks. Sizing against current volatility means a more volatile instrument gets a smaller position for the same risk budget.
Stop loss
- A pre-set exit level that closes a losing position. Placing it with the trade rather than afterwards means the exit is decided before the position exists — and before there is any emotional reason to move it.
Drawdown
- The fall from a peak in account equity to the subsequent trough, quoted as a percentage. Maximum drawdown is the largest such fall over the period measured, and is the honest counterpart to a return figure.
Daily loss halt
- A rule that stops trading for the rest of the day once losses reach a set limit, so a bad day cannot compound into a bad week.
Leverage
- Trading with exposure larger than the capital committed. It multiplies gains and losses alike, and beyond a point makes liquidation likely on an ordinary price move. AlgoGains applies a hard ceiling the algorithms cannot exceed.
Liquidation
- Forced closure of a leveraged position by the exchange when margin is insufficient. It happens at the exchange's price on the exchange's timing, not at a level of your choosing.
Slippage
- The difference between the price expected and the price obtained. It widens in fast or thin markets, which is why a stop level is not a guaranteed fill price.
Outage failsafe
- Behaviour defined in advance for when the exchange or the connection to it fails. AlgoGains goes flat and stays out rather than trading on stale data.
INSTRUMENTS AND MARKETS
Instruments and markets
Perpetual contract
- A derivative tracking an asset's price with no expiry date. Held positions pay or receive a periodic funding rate, which is a real cost of carry rather than a fee charged by anyone.
Funding rate
- The periodic payment between long and short holders of a perpetual contract that keeps its price near the underlying. It can be positive or negative and accrues for as long as the position is open.
Spot
- Buying or selling the asset itself for immediate settlement, as opposed to a derivative referencing its price. No leverage, no funding, no liquidation.
Volatility
- How much a price moves over a period. It is the input that drives position sizing: the same rupee risk buys a smaller position in a more volatile market.
Delta Exchange
- The Indian crypto derivatives exchange where AlgoGains clients hold their own accounts and where all client assets are custodied.
METHOD AND EVIDENCE
Method and evidence
Backtest
- Running a strategy over historical data to see how it would have behaved. Useful for elimination, weak as evidence: it cannot capture slippage, outages or the temptation to keep adjusting until the past looks good.
Out-of-sample testing
- Validating a model on data it was not fitted on. Without it, a backtest mostly measures how well a model has memorised its own history.
Overfitting
- Tuning a strategy so closely to past data that it captures noise rather than a durable effect. The signature is a backtest far better than live results.
Market regime
- The prevailing character of a market — trending, range-bound, or violently volatile. A strategy that works in one regime can lose steadily in another, which is why regime is sized for rather than assumed.
Paper trading
- Running a strategy on live prices without real money. It tests the plumbing and the logic; it does not test slippage, fills at scale, or how anyone behaves when the money is real.
REGULATION AND TAX
Regulation and tax
Virtual digital asset (VDA)
- The Indian statutory category covering cryptocurrencies, tokens and NFTs, defined in section 2(47A) of the Income-tax Act. Gains are taxed at 30% with 1% TDS on transfers, and losses cannot be set off or carried forward.
TDS
- Tax deducted at source. Section 194S requires 1% on the consideration for a VDA transfer, deducted by the exchange on Indian platforms. It is a credit against your final liability, not an additional tax.
Schedule VDA
- The part of the Indian income tax return where virtual digital asset transactions are reported, transfer by transfer, with acquisition and disposal detail for each.
SEBI
- The Securities and Exchange Board of India. AlgoGains is not registered with SEBI as a portfolio manager or investment adviser, and virtual digital assets are not a SEBI-regulated securities class.
Portfolio Management Service (PMS)
- A SEBI-regulated arrangement for managing securities portfolios above a prescribed minimum. The AlgoGains crypto service is not a PMS, and investors have no recourse to SEBI investor-protection mechanisms in respect of it.
KYC
- Know Your Customer — the identity verification a regulated platform must complete. Clients complete Delta Exchange's KYC themselves, in their own name; AlgoGains is not a party to it.
Tax terms are covered in more depth in the India crypto tax guide, and the risk controls in how it works.