Lingo topic · 40 terms
Trading psychology
Fear, greed, FOMO and the trader in the mirror.
A
B
- Bag HolderSomeone stuck holding a position that has collapsed in value, usually hoping it comes back.
- Bear TrapA false breakdown below support that lures sellers in, then snaps back up and leaves them trapped in losing shorts.
- BearishExpecting a price to fall. A bearish market, candle or trader leans toward lower prices.
- BTFDSlang for 'buy the dip': buying after a price drop on the belief it will bounce back.
- Bull TrapA false breakout above resistance that lures buyers in, then reverses and leaves them stuck in losing trades.
- BullishExpecting a price to rise. A bullish market, candle or trader leans toward higher prices.
C
- Commitments of Traders ReportA weekly CFTC report showing how different groups of traders are positioned in US futures markets, including currency futures.
- ContrarianA trader who deliberately goes against the crowd, buying when others are fearful and selling when they are greedy.
- Cover on a BounceClosing a short position once price starts rebounding, rather than waiting to see how far the bounce goes.
D
F
- Falling KnifeA price that is dropping fast. Trying to buy it before it stops is called catching a falling knife.
- Fed PutThe belief that the Federal Reserve will step in with easier policy if markets fall hard enough, acting like insurance for investors.
- FOMOFear of missing out: the urge to jump into a trade because price is moving fast and everyone else seems to be getting rich.
- FUDFear, uncertainty and doubt: negative talk, true or not, that makes people want to sell.
G
I
N
- NAAIM Exposure IndexA weekly survey showing how heavily active US money managers are invested in stocks.
- Noise TradingTrading on hunches, rumours or random chatter instead of real information or a tested plan.
- Noob TrapAny setup, scheme or price move that lures in inexperienced traders and takes their money.
P
- Pain TradeThe market move that would hurt the most people, which, annoyingly, often seems to be the one that happens.
- ParabolicA price move that steepens faster and faster until the chart is nearly vertical.
- Put-Call RatioThe number of put options traded divided by the number of call options, used as a gauge of fear versus greed.
R
- Risk AppetiteHow willing investors are, at a given moment, to take chances in search of higher returns.
- Risk AversionA mood where investors shun risky assets and rush for safety, even at the cost of lower returns.
- Risk SentimentThe market's overall mood, swinging between greedy risk-taking and fearful safety-seeking.
S
- Santa Claus RallyThe tendency for US stocks to rise in the last few trading days of December and the first days of January.
- SentimentThe overall mood of traders toward a market: optimistic, pessimistic or somewhere in between.
- Sentiment AnalysisStudying how traders feel and how they are positioned, to judge where the market might go next.
- Short SqueezeA rapid price spike as traders who bet on a fall are forced to buy back, and their buying pushes the price even higher.
- SidelinesStaying out of the market, holding no positions, usually while waiting for a clearer opportunity.
T
- TINA"There is no alternative": the idea that investors pile into stocks because other options, like bonds or cash, pay almost nothing.
- Trading planYour written rulebook: what you trade, when you enter and exit, and how much you risk, decided before the pressure hits.
- Trading PsychologyThe emotions and mental habits, like fear, greed and impatience, that shape how you trade.
V
W
Y
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