For new investors, entering the stock market can be intimidating with jargon like “dead cat bounce,” “whales,” and “bear market” dominating the space (and while it may sound like a zoo, rest assured there are no actual animals involved).
As such, many investors turn to search engines like Google for answers, with the term “stock market” itself receiving more than 2.4 million Google searches each month according to search engine optimization software Ahrefs.
Financial services provider CMC Markets has used global Google search data to understand which terms are causing the greatest confusion among investors.
READ: CMC Markets on track to diversify revenues, says broker
CMC Markets chief market analyst Michael Hewson said it was not surprising that a lot of people find financial markets terminology baffling.
“As market professionals, we have to get used to new acronyms on a regular basis, and that’s before you take into account the ones that are in regular use,” he said.
“If you’re looking to hone your interest in financial markets, it’s a huge benefit if you can understand the language that gets used on a regular basis.”
Commonly searched finance terms explained
According to CMC Markets’ analysis of global Google search data, these are the top 15 stock market terms internet users want to understand and what they mean.
ETF (average monthly searches 103,000): ETF stands for exchange-traded fund. An ETF is an investment fund made up of multiple assets that can include stocks, commodities, bonds, or a mixture of investment types which are known as holdings. ETFs trade on an exchange like a stock does. ETFs are generally considered safer investments because they are less volatile than individual stocks.
IPO (average monthly searches 95,000): IPO stands for initial public offering. An IPO occurs when a private company offers its shares to the public on a stock exchange for the first time. IPOs are used to raise capital and boost the public profile of companies.
Broker (average monthly searches 46,000): A broker is an individual or firm that buys and/or sells securities on behalf of an investor. They may also provide investors with research, investment advice, and market intelligence.
Arbitrage (average monthly searches 23,000): Arbitrage is the simultaneous buying and selling of securities, currency, or commodities in different markets to take advantage of differing prices for the same asset. For example, if a stock is trading for $10 on the New York Stock Exchange (NYSE) and $11 on the London Stock Exchange (LSE), a trader could buy the stock on the NYSE and immediately sell it on the LSE for a profit of $1 per share.
ADR (average monthly searches 22,000): ADR stands for American depository receipts. ADRs are securities issued by a bank that represent shares in a non-American company that trades on an American stock exchange. They provide US investors exposure to non-American stocks without adding the complexity of dealing with foreign stock markets.
Bear market (average monthly searches 11,000): A bear market occurs when there is a continuous drop in the price of securities, generally when a broad market index falls by 20% or more from its most recent high.
Bull market (average monthly searches 7,600): A bull market is the opposite of a bear market, occurring when the price of securities is continuously rising.
To the moon (average monthly searches 4,900): The phrase to the moon, often accompanied by a rocket emoji online, is used by an investor about a stock they believe is going to see a huge increase. The phrase is popular among meme stock and cryptocurrency traders.
Dividend yield (average monthly searches 3,900): Dividend yield is a financial ratio that shows investors what percentage of a company’s share price it pays out in dividends each year.
Dead cat bounce (average monthly searches 3,200): A dead cat bounce occurs when there is a temporary lift in share prices after a substantial decrease which is caused by speculators buying to cover their position. The phrase originates from the Wall Street expression “even a dead cat will bounce if it falls from a great height.”
Tanking (average monthly searches 2,400): A stock is tanking when its price is falling very rapidly. It commonly occurs when companies report quarterly earnings that fall short of the market expectation or upon the release of negative news.
Averaging down (average monthly searches 2,300): Averaging down is an investment strategy that involves investing additional money into a stock as it declines in price to bring down the average cost of each share.
Whales (average monthly searches 1,800): A whale is a nickname given to investors, both individuals and companies, who have enough money or power to manipulate the market, typically by making a substantial investment or cashing out a large position in a given stock or security.
Day trading (average monthly searches 1,700): Day trading is an investment strategy that involves buying and selling stocks within the same day to profit from short-term price movements.
Margin account (average monthly searches 1,600): A margin account is a type of brokerage account by which a broker lends an investor cash to purchase securities using the account as collateral. In return, the investor pays the broker a periodic interest rate.
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