How can "hamster", "moose" and "Uncle Kolya" upset an investor

YEREVAN, April 4. /ARKA/. An investor, regardless of the chosen strategy, should always monitor market trends, study various sources - not only news portals with data and analytics. It is useful and interesting to read social networks, non-fiction, visit chat rooms where experienced market participants communicate. The language of professionals in such channels is often not official, but lively and figurative, and requires some kind of decoding.

To make it easier to navigate through the slang of the stock exchange, we will ызуфл about common expressions.

Deals

Buy the dip - buying a stock when its value is falling sharply.

Divgap - a situationб when a stock falls sharply in price. Let's explain at what point and why it occurs. The company announces a cutoff day - after that the stock is traded without dividends. If an investor buys shares not later than two days before this date, heёыру will be included in the register and will receive payments. Accordingly, in the last weeks before the cut-off day the demand for securities increases. Immediately after it, many investors sell shares, because they have already entered the register and can earn on the growth of the asset. However, buyers are no longer ready to pay the previous amount, and the price falls sharply

Uncle Kolya (Nikolai, Kolyan) - Margin Call, i.e. a notification about the need to replenish the account, which the trader receives from the broker. If an investor who has borrowed additional funds from the intermediary company incurs critical losses, he/she must compensate them. Otherwise, the broker will independently dispose of the assets to ensure repayment of the debt. The word "margin" means "the investor's own funds in the trading account, which serve as collateral. And "call" comes from the times when trades were made over the phone.

Cutlet - all funds in a brokerage account. "Buying for the whole cutlet" means investing in a single asset, disregarding the principle of diversification.

Stocking up - buying a large amount of assets in anticipation of an uptrend.

Catching a falling knife - buying an asset that is falling in price with the expectation that the downturn will soon stop and growth will begin. This is a risky decision, as a positive scenario is not guaranteed.

Panic buy - impulsive purchase of securities at the moment of sharp fall or growth.  

Moose - loss. The expression "to slaughter a moose" describes the situation when an investor closes an unsuccessful deal and fixes losses.

Closure or close - the price of closing a deal.

Market situations

Chainsaw (saw) - extremely strong price fluctuations within a day. When displaying changes on the chart, the lines visually resemble the teeth of a saw.

A bounce is a change in the price of an asset according to the scheme: a sharp fall to the lowest possible level and a return to growth. There is also an expression "dead cat bounce". It means that after a powerful fall of a security there is a small growth, but then it becomes even cheaper.

Breakdown - price overcoming the level that prevented it from moving in a certain direction.

Spill - falling of quotations due to mass sale of securities.

Rocket - a rapid rise in price. This may be the name of the stock itself, which is expected to take off. "Getting on the rocket, i.e. investing in this asset, is not always a positive scenario. The growth of a stock can be explained by "pumping", which we will talk about below.   

High - the highest price of assets in the market. Easthigh - historical maximum. Low- a term denoting the opposite situation, i.e. minimum value.

A New Year's/Christmas rally, or Santa Claus rally, is a rise in stock market prices between Catholic Christmas and New Year's Day. There are several reasons for this trend. For example:

- Investors sell and buy back weak portfolio positions to offset capital gains tax. This causes strong securities to rise.

- Market participants are building a portfolio for the coming year, often looking for value stocks that increase in price due to demand.

- General expectation of the New Year rally due to the long history of the phenomenon and investors' willingness to make deals.

The "rally" does not have a stable scenario, each year is characterized by its own intensity.

Market participants

"Blue chips" are large and reliable issuers with large capitalization, recognized market leaders.  

Puppeteers (puppets) - professional market participants capable of managing price movements and shaping trends due to their high status and insider information. Such players include:

- large banks and investment companies through whose accounts and infrastructure others trade;

- institutional investors (funds, private banks, insurance organizations, etc.), i.e. companies that attract and accumulate funds of smaller participants for investment in various assets;

- speculators, are those who competently calculate the moment of entering the market and quickly react to trends.

Longist - an investor who buys securities and waits for them to grow significantly in value. The term is explained by the fact that this type of transaction is called a long position in English. Another term for an investor is bull. It is based on association. Bulls raise their rival on their horns, and market players move prices upwards.

Bears (shorts) - investors who open short positions, i.e.

1) take assets "on loan" from the broker against collateral

2) sell them at a high price

3) wait for the quotations to fall, buy securities again and return them to the broker.

4) receive the difference between the purchase and sale prices as profit.

Such trades need to be closed in a short period of time, hence the name. Such players are called bears, because they lower prices on the exchange, like bears hitting their rival with their paw from top to bottom.

Hamster (lemming) - an inexperienced investor following other market participants, often acting on emotions and not assessing the situation.  

Zombie - a company in a pre-bankruptcy state. Its securities are constantly jumping in price and therefore remain an attractive asset.

Chicken - an investor who tries to avoid all risks and invests in the most reliable assets with predictable returns, such as government bonds.

Instruments

Casino (sometimes used "frenzied stocks") - securities of companies that do not occupy leading positions in the market, with high volatility.

Papira (from English paper) - a share, i.e. a security.

Divi - an abbreviation of the word "dividends". This is the name of payments to shareholders, which are generated from the company's profits. Their regularity and size depend on the policy of the organization. Not all companies provide shareholders with dividends.   

Prefs are preferred shares. They differ from ordinary shares in that 1) dividends are fixed in the charter and paid to the owners in priority order; 2) they do not give the right to vote at corporate meetings; 3) they are subject to less fluctuations in price.

Divitiker - a stock backed by stable high dividends.

Bitok - bitcoin.

Strategies

Pump and dump is a strategy of manipulating the price of an asset. Let's describe the mechanism: experienced traders buy shares en masse, there is a growth that is not justified by financial indicators. Unscrupulous market beginners follow the trend, and "dumpers" sell them securities at a high price. After that, the assets become cheaper, and the investors who bought them suffer losses.

Scalping is a trading strategy in which a market participant makes many trades within short periods of time, sometimes even within a minute. A scalper must analyze the current situation very quickly and act accurately to make money on price fluctuations.

Laddering is an investment strategy in which securities are bought gradually rather than at one time. It allows to reduce the average price of assets and the risk of volatility. The main principle is regularity of investments.

Sitting on the fence - an investor decides to wait out uncertainty in the market, closes positions and refuses from transactions for some period.

This material was prepared as part of a joint project "The Year of Investing in Oneself" by ARKA, AMI Novosti-Armenia news agencies and Freedom Broker Armenia. 

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10:00 04/04/2024