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Guide for Trading Slang Terms

 
Guide for trading slang terms
 
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Whether you are a beginner trader or a trader with experience you will come across terms that do not always correspond to reality. Here are some common slang terms and their description that are used in several different forums on the net

 

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All the Boats Rise

 

When the tide comes in, all the boats rise. When the stock market is quickly rising, there is a tendency for most stocks to increase in value due to over-optimism. The opposite is, When the tide goes out, all the boats sink, which is due to over-pessimism.

 

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Apes

 

The term apes derives from the film "Rise of the Planet Apes," but it has since become common stock trading jargon. WallStreetBets members utilize it to indicate solidarity with one another, same as it was used in the film to represent solidarity among the apes.

 

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ARG

 

Aggressive revenue growth.

 

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ATH

 

All-time-high – the highest price an assets or index has ever reached.

 

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Bagholder

 

A bagholder is a shareholder who has been left with shares of worthless equities. The bagholder often purchased in during the top, when the asset was being hyped and the price was high, then held it through significant drops, losing a lot of money in the process.

 

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BANG

 

BANG is an acronym used to describe four stocks that are popular in the WallStreetBets community: BlackBerry (BB), AMC Entertainment (AMC), Nokia (NOK), and GameStop (GME).

 

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Bear Hug

 

When a company offers to buy another company at a signficant premium. The intent of a high offer price is to entice shareholders of the target company to vote in favor of a merger, and against its management. Usually considered a hostile takeover offer.

 

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Bearish

 

To believe the market will go down.

 

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Black Friday

 

The Friday after Thanksgiving, which is a very popular shopping day for retailers. In the black means to be profitable. A very recent and annoying cliché, as it conjures up memories of 1987 and 1929.

 

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Black Monday

 

The day the stock market crashed on October 19, 1987.

 

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Black swans

 

Black swans refer a completely unforeseen and unexpected stance. The expression, so named after the old saying that, theoretically, black swans must exist although only white ones were ever seen (clearly, the author of this phrase didn’t travel widely). Black swans are as significant as they are startling and must have a huge impact (often negative) on the market. Famous black swans include the bursting of the dot com bubble in the 90s and the 2008 global financial crisis.

 

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Black Tuesday

 

The day the stock market crashed on October 29, 1929.

 

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Bottom Fishing

 

After a large sell-off or drop in the market, a slang term for picking oversold stocks.

 

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Bullish

 

To believe the market will go up.

 

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Buy & Hold

 

A foolish method of investing, when you buy a stock and completely forget about it indefinitely. Jim Cramer's term Buy & Homework, or to evaluate your portfolio periodically, is more practical.

 

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Buy the dip

 

Investors that buy the dip attempt to buy a stock after it has fallen from its recent high. They believe that the price decrease is just transitory or a one-time occurrence, and that the dip represents a chance to purchase shares at a discount.

 

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Castles in the Sky

 

When stock prices are extremely overvalued, and not justifiable by future increases in earnings. 1987 and 1999 are examples, just before large market drops.

 

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Chasing Returns

 

Taking on more risk to gain a higher return. Banks buying more SIVs (risky debt) to gain higher returns had greatly contributed to the liquidity crisis of 2007-09, as many of the SIV funds became insolvent. (2) When a group of stocks or the entire market has experienced a high return, and investors invest more into this group just for that reason. Often P/E Inflation occurs as a result, when such stocks go up in price while their earnings do not go up quite as much. [P/E = price divided by earnings.]

 

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Closing Bell

 

When trading stops on the New York Stock Exchange and Nasdaq each day, a bell is rung to signal the event.

 

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Crash

 

A large sell-off (-10% or more) in the stock market in a single day.

 

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Crowding Out

 

When the Federal Government incurs massive budget deficits, it must borrow tremoundous sums of money. This effectively "crowds out" private businesses from borrowing in the stock markets as there is less money available for loans.

 

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DD

 

DD stands for due diligence, which signifies you've done your homework on a specific stock or the general market before investing. Redditors may use DD in the title of a post if they're presenting research they've done or a recent investment they made as a result of prior due diligence.

 

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Dead Cat Bounce

 

After a stock (or even the entire market) has dropped substantially, there is often a moderate bounce to the up side. This bounce may be caused by value investors believing the stock had become undervalued at this beaten down price, or by short sellers covering their positions as shorting was compounding on the way down.

 

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Diamond Hands

 

WallStreetBets members use the term “diamond hands” to say they plan to hold their stock for the long term. These individuals have a high risk tolerance and can withstand the volatility of the market. Many Redditors and retail investors also use the term “diamond hands” in reference to especially volatile stocks or those that have declined in value.

 

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Dovish

 

When the Federal Reserve Governors imply that interest rates may be going down soon. The opposite of hawkish.

 

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Fading

 

Fading is when a trader chooses to go against trends. That’s a bold tactic that requires long-term experience, so only top pro traders can afford to apply it.

 

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Field Bet

 

Buying a group of stocks in the same industry, most often when a group is unprofitable and oversold. The theory is that some companies may go bankrupt, but one or more may survive and incur large gains in the stock price.

 

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Flash Crash

 

A crash in stock prices caused by computerized automated selling that can result in a 5% to 10% drop in the market within an hour or two. A precursor to such an event is often extremely negative market futures just before opening. Volatility is extreme during Flash Crashes due to automated buying and selling. Large trading errors have also caused Flash Crashes, like erroneously selling 1,000,000 shares of a stock, instead of $1,000,000's worth.

 

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FOMO

 

Fear of missing out. Investing, without any analysis, just because everyone else is and they seem to be making money.

 

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FUD

 

Fear, uncertainty and doubt. Baseless negativity spread intentionally by a short seller who benefit if price of something to drop.

 

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Gentlemen Prefer Bonds

 

An obsolete saying used in a long-term bear market for stocks. Bonds tend to outperform stocks during recessions.

 

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GUH

 

GUH is an internet term used to mean someone is annoyed or upset. In the context of WallStreetBets, GUH is likely to be used when someone has lost a lot of money on an investment. For example, someone might use GUH in the title of a Reddit post where they show a stock chart that’s sloping severely downward.

 

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Hawkish

 

When the Federal Reserve Governors imply that interest rates may be going up soon. The opposite of dovish.

 

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HODL

 

The term HODL originated as a misspelling of the word “hold.” Ultimately the acronym “hold on for dear life” was attached to the term. HODL is a widely known concept in the crypto community that refers to the strategy of not selling your digital assets, even amid extreme price changes in the market.

 

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Hold the Line

 

Investors might be especially likely to use this phrase when a particular stock is down and they’re encouraging others not to exit their positions.

 

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Joe Granville Wednesday

 

The Dow Jones Industrial Average hit 1000 on Tuesday January 6, 1981, after not reaching 1000 since January 26, 1973. On Wednesday January 7, 1981, Joe Granville announced in his investment newsletter to "Sell Everything!". The Dow dropped by more than 7% in the next six weeks, which made him quite famous. The Dow kept falling until August, 1982.

 

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JPOW

 

JPOW is a slang nickname for Jerome Powell, the chairman of the Federal Reserve. Investors on WallStreetBets generally refer to Powell as JPOW when discussing current Federal Reserve events or what’s going on in the economy.

 

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Limit Down

 

Price controls on futures contracts, which halt trading after a large drop.

 

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Long Squeeze

 

A long squeeze is when an asset’s price suddenly drops, pushing long holders to sell their assets to avoid potential losses.

 

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Meme Stock

 

A meme stock is a stock that’s gone viral on forums such as WallStreetBets and on social media. The stock might see a surge in its stock price, not because of the company’s performance, but because of this viral attention.

 

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Merger Monday

 

Mergers, or companies buying other companies, often consummate a deal over a weekend, and then publicly announce it on a Monday.

 

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Misery Index

 

The Unemployment Rate and the Inflation Rate added together. The term was made famous by President Jimmy Carter during his 1976 presidential campaign.

 

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Mooning

 

To the moon or mooning describes a shockingly high growth of an asset’s price. Often, such change is also very quick.

 

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Nifty Fifty

 

A group of 50 large cap overvalued stocks that greatly influenced the market in the 1960s.

 

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Opening Bell

 

When trading starts on the New York Stock Exchange and Nasdaq each day, a bell is rung to signal the event.

 

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Painting the Tape

 

When a group of investors illegally move a stock by trading it all at the same time. This happens every day, just watch the tape of most active light volume stocks, but don't get sucked in. Day trader newsletter emails can cause such moves.

 

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Paper Hands

 

Paper hands describes someone who sells a stock at the first sign of trouble rather than holding it for the long term. “Paper hands” is usually an insult Redditors use to describe investors who aren’t standing in solidarity with them by holding a stock. For example, inventors who sold their GameStop stock in 2021 rather than holding it for the long term may have been described as having paper hands.

 

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Pump and dump

 

When the market is bullish and praises an asset, leading to a fast price increase, followed by a crash.

 

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Quadruple Witching Hour

 

The final hour of trading on a Friday when stock index futures, single stock futures, stock index options, and stock options all expire. This happens on the third Friday in March, June, September, and December. This used to be called the Triple Witching Hour.

 

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Random Walk

 

A 1970s author created a portfolio of stocks by throwing darts randomly at a newspaper stock price table. The dart portfolio outperformed the collective results of a sideways market.

 

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Rubber Band Effect

 

After a large sell-off in the market, there is a tendency for the market to bounce back right away. It is caused by computerized trading programs. It's also known as a V rally due to how it appears on a chart.

 

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Sell in May and Go Away

 

The market is often seasonal, rising in late winter at times. The market can run out of steam in May, with stock prices falling, causing the Summer Doldrums.

 

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Shimming

 

Stealing a few pennies from trades by specialists or market makers. See Trading Ahead.

 

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Short Squeeze

 

A short squeeze happens when many bet against a stock, but then its price suddenly soars. In this case, short sellers try to close out their positions ASAP.

 

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Stagflation

 

A state of the economy when Unemployment is high and Inflation is high. Quite often, stagflation is caused by massive deficit spending by the Federal Government. This deficit spending reduces private sector output with higher inflation.

 

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Stonks

 

Stonk is a slang term used to refer to stock. It’s an intentional misspelling that’s often used in internet memes or online investing forums.

 

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Suicide pill

 

Suicide pill for a company’s desperate tactic to avoid a takeover via a set of self-destructive actions. This strategy sometimes goes by an even murkier name of Jonestown Defense, inspired by the 1978’s Jonestown mass suicide.

 

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Summer Doldrums

 

Stocks tend to remain flat or drop during the summer. Many people are on vacation, with trading volume usually dropping also.

 

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Tanking

 

Tanking used when a price goes down fast and significantly. Not something any investor would want to witness, but these things happen.

 

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Tendies

 

Tendies is simply another term for gains or profit made from an investment. Investors on WallStreetBets often use the term when talking about big wins in the stock market.

 

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To the Moon

 

To the moon is a phrase that’s often used in WallStreetBets to describe the performance of a stock. When a stock is going “to the moon,” it means it’s increasing in stock price. In the Reddit forum, the phrase “to the moon” is often accompanied by a rocket emoji.

 

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Trading Ahead

 

Unethical and illegal trading by specialists or market makers. A specialist may buy a stock for themselves from John Q. Public even though a better price is available from another seller. The specialist can view bid and ask prices and then manually mis-match them, or see ahead to a less favorable price. It happens all the time in this editor's experience, by observing how long it takes for a stop order to execute after the stop price was reached. This practice is a form of shimming.

 

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Trading Imbalance

 

A situation where a large block of stock is put up for sale, but not enough buyers are available for purchase, and a market maker is unable to buy the imbalance. Lightly traded and tightly held stocks are considered temporarily illiquid during such imbalances. On occasion, a trading halt is put into place until enough buyers are available to purchase the deficit. On rare occasion, a handful of buyers can buy the stock at a huge discount if the stock was not halted during the imbalance. On the New York Stock Exchange, large stocks usually have a "delayed open" for such imbalances, as a trading specialist will fill the order by lining up buyers for the block, and then open trading for the stock for the day.

 

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Triple Witching Hour

 

The final hour of trading on a Friday when stock index futures, stock index options, and stock options all expire. This happens on the third Friday in March, June, September, and December. See Quadruple Witching Hour.

 

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Unicorn

 

A privately held company that had quickly reached one billion dollars in revenue, and is now considering going public. Such companies appear to be "mythical" like a unicorn due to their swift growth, and investment banks may actually hesitate to bring them public. Fast growing large companies awaiting favorable market conditions to go public are often referred to as unicorns.

 

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V Rally

 

After a large sell-off in the market, there is a tendency for the market to bounce back right away. It is caused by computerized trading programs. The term derives from how the move appears on a chart. Also known as the Rubber Band Effect.

 

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WallStreetBets

 

WallStreetBets is an internet community housed on the popular website Reddit. Founded in 2012, it’s a place for retail investors to share investing wins and losses, ask for advice, and discuss current market events.

 

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Whales

 

Whales are movers and shakers (whether a trust, bank or even an individual) with such a lot of capital that their buys and sells make waves in the market like only animals of gigantic size can.

 

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YOLO

 

YOLO stands for “you only live once.” In the world of WallStreetBets, investors might describe a YOLO trade, where they invested a significant amount of money in a high-risk trade.

 

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Zombie Stock

 

Zombies are companies that earn just enough money to continue operating and service debt but are unable to pay off their debt.

 

Now that you know some of the terms you can feel comfortable because now you also know exactly what the term means.

 

Do you know other slang terms in use?
Please write them down in the comments below and we'll add them to our slang dictionary.

 
 
 
 

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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.

 

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ronen.mosy

ronen.mosy

  • 29/10/2022 7:16
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    Blue chip - describe stable, and long-established stocks and shares.

     
     
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