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Stock Lingo

Stock Market Lingo for Beginners

8 min read

Like with anything, the stock market is as simple or complicated as you wish to make it. Investing in great companies over a long period is a near-guaranteed way of reaching true financial stability. Learning how to do so is another story. To learn from the best investors and services, you must familiarize yourself with the stock lingo. I’m sure you have already realized that there is an entirely different language in the investing world. 

Stock Market Lingo

It takes everyone a while to learn these words and phrases, and you’ll even find that different people use different words for the same meaning. The stock market is an intricate and complex machine.

As time goes on and the financial world evolves, new phrases are always popping up. Luckily, BullishBears is here to help sort out some of the confusion!

You can find most of these terms in our educational videos and lessons, but we’ll review some of the more commonly used words in this article!

These days, social media is one of the most influential factors in what is moving the stock market. As strange as it is, many stocks move more from being a trending topic rather than company fundamentals.

But as a trader, you must change with the times. Decades ago, it paid to be invested in the financial sector or industrials. In the 2000s, tech stocks flew, eventually leading to the dot-com bubble. Today, if you can stand the volatility, it can often pay to be invested in this first example of stock lingo.

Social Media Stock Lingo

1. Meme Stocks

Before 2021, did you ever think you’d hear the words meme and stock put together? What is a meme stock? There’s no real concrete definition or set of qualifications that a stock must have. Meme stock status is more gauged by social media influence and the percentage of shares shorted. GameStop and AMC pioneered the meme stock craze. But there were dozens of others included in the movement. 

Meme stocks often have a sense of nostalgia to them as companies that might be considered past their prime. Examples include BlackBerry, Nokia, Koss, and Bed Bath and Beyond. These stocks aren’t for the faint of heart, though. Meme stocks are accompanied by inherent volatility that can swing in either direction on any given day.

2. Apes

You’ve probably heard or at least seen the term Apes being used when discussing meme stocks. So, what does it mean to be an AMC Ape? Retail investors involved in the meme stock short squeeze started referring to themselves as apes. The official reason is an homage to the movie Planet of the Apes, where the apes rallied together in a united front. Right now, the Apes are one of the most powerful groups on Wall Street and have single-handedly caused several short squeezes. 

3. Diamond Hands

I am sure you have seen the diamond hands emojis people use when talking about a certain stock. Having diamond hands means holding that stock forever or until an event like a short squeeze happens. Diamond hands are considered the strongest hands you can have for an investor; the opposite is paper hands. 

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Greeks Stock Lingo

As investing has gone mainstream, options trading has become popular amongst retail investors. It takes less upfront capital with potentially larger returns. It’s not as easy, though.

Novice investors should check out some of our educational lessons before they jump into the world of options trading and stock lingo. 

The GreeksThe Greeks are measures of options contract sensitivity. By nature, options contracts have a decay rate as they approach their expiry date. Options traders use Greek letters to measure different factors that have a direct effect on the price of the contract. When someone mentions the Greeks, they’re almost always talking about options trading. Let’s take a look at what each Greek letter means when it comes to your contract.

1. Delta

The Delta is a measure of the change in the price of a contract based on a $1 price change in the underlying asset. It tells us exactly how much the price of the contract will be affected by the stock price rising or falling.

2. Gamma

Going one step further, the Gamma measures the change in Delta when the underlying asset price rises or falls. For every point that the stock price moves, the Gamma will measure how this affects the Delta of the contract.

3. Theta

Theta is one of the more commonly seen Greek letters. It measures the effect that time has on the premium of the contract. A general rule of thumb with options: the longer you’re from your expiry date, the lower the time decay

4. Vega

The final Greek is Vega, calculating how sensitive the contract is to market volatility. An increase in volatility will generally help to increase the price of options. A decrease in volatility will decrease the price of options. 

Wall Street Stock Lingo

Much has been made over the past year about the evil institutional investors on Wall Street. The Reddit-induced short squeezes have specifically targeted hedge funds with short positions in certain stocks. Without the institutional side however, the stock market simply wouldn’t function. What’s their stock lingo?

1. Market Makers

Market makers have been getting a bad reputation, but they play a very necessary role in the stock market. They essentially create stock spreads by determining the bid and asking for every asset. Market makers are both buyers and sellers of equities and turn a profit by selling within the spread they create. They are usually large financial institutions or banks and directly impact the markets. 

2. Dark Pools

Retail investors have also given these a bad reputation, although it seems they are not fully understood. Dark Pools exist so institutional investors can buy and sell shares of a stock without affecting the markets. These are essentially separate, unregulated markets for large investors to trade in. We are talking blocks of millions of shares. If someone sold millions of shares of a stock on the open market, the stock price would take a sizable hit. 

3. Payment for Order Flow

This was at the crux of the Reddit vs. Wall Street movement earlier this year. Payment for Order Flow is a specific way a brokerage can earn revenue. It requires them to send trading information to market makers for a small fee. This system is used by platforms like Robinhood, which is how they can provide no-fee transactions to its users. Some have found this to be unethical, as it essentially gives trades to institutions before they even take place in their system. 

Stock Trading Lingo

Once you have learned all the stock lingo, start trading! But wait, there is even more vocabulary to learn about the actual art of trading. What kind of trader do you want to be? How long is your investment horizon? Let’s look at our last stock market terminology that will help you determine your trading style.

1. Swing Trader

They say swing trading is a happy medium between day trading and long-term investing. Swing traders will initiate a position in an asset intending to sell within a certain time frame. Usually, they will hold the asset while it rises in price, anywhere from a few days to a few months. Swing trading takes some knowledge of technical analysis and awareness of potential market catalysts.

2. Momo Trader

A trading style somewhat similar to swing trading, momo traders look to play a stock’s momentum. This momentum can be from industry catalysts, ea, earnings reports, or anything related to the stock. The key to momo trading is getting out fast to lock in a profit. Otherwise, that momentum can move against you quickly.

3. Fomo Trader 

This is not advisable for people to use as a trading strategy. FOMO stands for Fear Of Missing Out and refers to traders buying a stock after it has surged. Buying a stock at its all-time highs generally hasn’t been profitable. If you feel FOMO, remember that almost every asset that has skyrocketed in price eventually returns to Earth. Do not simply buy an asset because everyone else is; that is a good way to be left holding the bag! 

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