Have the latest investing buzzwords left you at a loss? We explain what they’re all about.
Investing in the stock market, especially with the rapidly evolving terminology online, can be a confusing endeavour. There are so many different terms being coined and thrown around; it can be difficult to keep track of them all.
If you want to know what these trendy new terms mean, this article is here to help. We break down expressions such as ‘paper hands’ and ‘diamond hands’, and discuss other investment terms that you should be aware of.
‘Diamond hands’ refers to an investor who has high risk tolerance. These investors are willing to hold on to a stock or asset even when it drastically drops in value because they believe that it will eventually go back up.
The phrase’s literal meaning connotes hardiness, reflecting the diamond’s unbreakable material strength. In a negative light, this could also imply a hardheaded obstinacy to shed a stock or asset despite its plunging value, risks and losses.
Having ‘paper hands’ is the opposite of having ‘diamond hands’. The term refers to investors with low risk tolerance. As a result, they sell their stocks or assets at the first sign of pressure, such as when the price is high and seems likely to drop, or when the price is dipping.
Just as those with ‘diamond hands’ could be viewed as being overly stubborn, those with ‘paper hands’ could be seen as overly cautious.
To the moon
This describes the future increase in value of a stock or asset. It could also describe the rapidly increasing value of an asset; in such a case, you could say it was heading ‘to the moon’. In the same way, ‘mooning’ refers to when the asset has peaked. The term also refers to the endgame for an investment strategy.
Apes together strong
This saying originates from a meme based on the Rise of the Planet of the Apes; in the movie, this was expressed using sign language by one of the ape leaders Caesar as the apes planned to overthrow mankind. In investing-speak, these ‘apes’ refer to investors who unite to outlast those who are selling a stock or asset.
Pump and dump
‘Pump and dump’, also known as ‘P&D’, is a scheme in which individuals or groups of people attempt to artificially increase the price of an asset by promoting it through social media websites, message boards, email spamming, etc. They then quickly sell off their investments for large profits at the expense of other investors who made purchases based on the misleading information.
Pump and dump schemes are illegal in most countries, but they still occur because they are relatively easier to get away with compared to other types of fraud or theft. These schemes have been around since the dawn of investing, but social media has further helped facilitate them because of the ease of hyping up and finding buyers.
A ‘bagholder’ is an individual who still holds onto their investments even though the price has dropped significantly and everyone else has let go of theirs. For instance, those who hold or buy during the dump phase of a ‘pump and dump’ scheme.
The term originated from combining the expression ‘left holding the bag’ with ‘shareholder’.
HODL was initially a drunken typo by GameKyuubi in the Bitcointalk forum. It has since become one of the most popular terms in stocks and cryptocurrency culture to describe holding onto your coins or investments even if it means taking heavy losses due to market fluctuations. It is now also known as an acronym for ‘hold on for dear life’.
For example: I couldn’t bring myself to sell my coins during the market crash; I’m going to HODL through thick and thin!
‘Tendies’, a slang for chicken tenders, refers to financial gains made from investments. It stems from a brand of self-deprecating humour where traders, especially from WallStreetBets, imply that they lived with their parents and exist on a diet of chicken tenders.
‘Whale’, also known as a ‘market maker’, is an individual or group of individuals who hold a large amount of an asset and can therefore manipulate the market price.
The term comes from the sheer size, and hence impact, of whales. In the world of investing, whales are able to control the prices of assets by buying and selling at will.
Some people see whales as a bad thing because they can easily manipulate the market, while others see them as a necessary part of a healthy market because they provide liquidity. For example, if I want to sell my shares of an asset but no one is buying, a whale could come in and buy my shares, which would then create liquidity.
Lastly, whales can have a positive or negative impact on the market, but it is important to be aware of them because they can easily move prices.
Now that you’ve got an idea of what these latest terms mean, get started with your own investments by checking out our comparison of online brokerage accounts.
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