Weird Trading Jargon You Need to Know

If you’re new to the day trading business, I’m sure you are getting quite the education in new terms, acronyms, and all sorts of day trading “jargon” that the rest of the professional world just doesn’t use. Here at the Oil Trading Group (OTG), we use day trading jargon and buzzwords every day in the live day trading room. The great thing is that if someone asks a question, I can usually answer it on the spot.

When I moderate the room you’ll hear me talk about “iceberg orders, hitting the bid or ask, or even fading a trade.” While these are odd terms and foreign “lingo” to most, the terminology can get even stranger.

What’s really weird about day trading jargon is the use of animals and even witches in some of the terminology.

Let’s face it, my friends, we have some strange terms that are used in day trading; whether it’s stocks, futures, or options, there’s the slang, jargon, and lingo that goes with every trading instrument.

The Basics

Let’s start with simple yet distinct words like “bearish” and “bullish.” Bearish can mean that the underlying sentiment is that the market will go down, or it can be used to describe the current market state if the market is headed lower.

Bullish is the exact opposite in that the underlying sentiment is that the market will rise and also is used to refer to the current market state. Some of the jargon that can cause sentiment and market structure to change is even weirder.

Here’s a little “bear/bull” trivia for you: the way they came up with these words was actually based on how each animal attacks it opponent. The bear will “bear down” to take its enemy, whereas the bull will use its horns and thrust upward.

It’s a Little Sick…

Another weird term is “The Dead Cat Bounce.” This phrase refers to when an instrument or even an entire market has a significant move to the downside and stops suddenly and “bounces” to the upside. This is often attributed to short sellers covering their positions and taking profit, but it should not be confused with a similar piece of trading jargon, the “V-Rally.”

After a market sells off, there can be a tendency for it to snap back relatively quickly. It’s believed that this could be caused by algorithmic and high frequency trading. As far as where the term dead cat bounce came from? It’s a little sick, but if you throw a dead cat off a 10-story building, it will bounce a little when it hits the ground.

The Witching Hour

We’ve discussed bulls, bears, and even dead cats (sorry cat lovers), but did you know there are “witches” in day trading jargon as well?

“Quadruple Witching” (formerly known as “Triple Witching”) refers to the moment when all stock index, index futures contracts, and options expire. The week of Quadruple Witching tends to produce volatile trading conditions and day traders should be cautious.

Quadruple Witching takes place on the third Friday every March, June, September, and December. The most volatile time of Quadruple Witching is, you guessed it, “Quadruple Witching Hour;” this is the final hour of trading before the exchanges close. It’s been given this term in reference to the actual witching hour of midnight which according to my research “is when the magic happens.”

Day trading jargon has been around for a very long time, and I’m quite sure that as time goes on, more and more slang, buzzwords, and nifty sayings will be added. Although these weird terms can be hard to understand for the layman or newcomer to day trading, it’s these strange but unique terms and jargon that make the day trading business fun…and attention getters at cocktail parties.