Languages and words are interesting, especially the way people and groups use them to create community. When used with good intent, words can empower and create a sense of belonging. Who doesn’t love a great pun or wordplay and enjoy knowing the hidden or underlying meaning? 

Many years ago, in my uni house, we had a small whiteboard where we’d try to outdo each other with obscure words we had to form into sentences and then use them whenever we could throughout the ensuing week. The intent was to expand our vocabularies as much as it was to show each other up! We excelled at it.
 

Why the sharemarket has its own vocabulary

Sharemarket terms evolve to capture speed, emotion and complexity in just a few words, allowing professionals to communicate complex ideas quickly and precisely with one another. 

In the finance industry, expressions have come from practical application on the trading floors, business meetings, water-cooler conversations and financial journalism. 

Now in the digital era, social media has added more jargon like 'diamond hands' [1] and 'HODL' [2] (see below). The result? A hybrid vocabulary that mixes Wall Street, Aussie finance desk and internet meme culture. 

The sharemarket isn’t just numbers and charts. The numbers and charts tell a story and the words for these stories are full of metaphors, shorthand, mood, and momentum.

ASX provides a comprehensive list of market terms and definitions on the Australian sharemarket by way of a Glossary [3].

We’ve grouped some of the most common phrases into themes as a shortlist to reference, learn from and use if you dare – so get that whiteboard ready!
 

Emotion and momentum [4]

This section refers to sharemarket terms and phrases that relate to market sentiment and direction.

• Bull market - rising share prices (think a bull thrusts upwards). When someone is said to be 'bullish', it means they are optimistic and have a view that a market or a stock will experience growth.
• Bear market - falling prices (think if you meet a bear you drop down). If someone is 'bearish', they may have a reduced risk appetite and a sense of pessimism for markets in that moment.
• Rally - a temporary surge after a fall.
• Correction - a moderate pullback (10-20%) from a recent high.
• Crash - a sharp, panic-driven decline (e.g. 1929, 1987, 2020).
• Rebound - recovery following a fall, a signal of renewed confidence.
• Hawkish and dovish - represent two distinct approaches to fiscal and monetary policy. Hawks focus on curbing inflation through higher interest rates. Doves are the opposite, favouring interest rate decreases to boost the economy.
   

People and players

These phrases describe a range of sharmarket participants and investment styles.

• Retail investor - individual investor, like you and me.
• Wholesale investor - an individual or entity that meets specific financial criteria and is considered more experienced in investing than a retail investor. Corporations Act 2001 (Cth) s 708 and 761G provide a legal definition of wholesale investors and the tests to meet that definition. 
• Institutional and professional investor - professional fund managers, pension funds or hedge funds.
• Day trader - buys and sells shares within a single day.
• Whale - a market participant so large their trades can move prices.
• Short seller - profits when share prices fall.
• Speculator - seeks to profit from price swings rather than the fundamentals of investing.
• Passive and active investments - a passive investor typically buys index funds that track an index or indices. An active investor has a hands-on approach and is often a stock selector who buys stocks, holding them for a period, and selling them in certain conditions.

Performance and value [5]

These sharemarket terms relate to markets, indices and company fundamentals.

• Index/indices - an index is a collection of a group of assets, such as stocks and bonds, used to track the performance of a specific sector or the broader market. The S&P/ASX 200 is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation [6]. 
• Yield vs return - the yield is the income the investment returns over time, typically expressed as a percentage. The return is the amount gained or lost on an investment over time, usually expressed as a dollar value.
• Alpha/beta - alpha measures the amount the investment has returned in comparison to the market index or other broad benchmark Index, such as the S&P/ASX 200 Index against which that return is compared. Beta measures the relative volatility of an investment and is an indication of its relative risk.
• Blue-chip stocks - large, reputable companies thought to have stable earnings and dividends.
• Penny stocks - low-priced, speculative shares that can be high risk with high volatility.
• Dividend and distribution - a company or fund’s profit payout to shareholders. Stocks pay dividends, funds pay distributions.
• Dollar-cost averaging [7] - involves investing the same amount of money at regular intervals, for example, monthly or quarterly, without regard to market movements. Investing a fixed dollar amount means that when prices are higher, your money buys fewer shares/exchange traded fund units, and when prices are lower, your money buys more.
• Earnings per share (EPS) - company profits divided by total shares.
• Market capitalisation [8] - company size (share price multiplied by shares outstanding).
• Price/earnings ratio (P/E) - a company’s share price divided by its earnings. The PE ratio shows how many times, in years, it will take for your purchase to be covered by earnings [9].
• Liquidity - how easily an investment or financial product can be converted to cash [10]. 
• Volatility - how much a share price moves over a given time.
• Arbitrage - the simultaneous buying and selling of an asset in different markets to profit from any price differences.
• Bid/ask - the bid is the highest price at which someone is willing to buy the security, and the ask or offer is the lowest price at which someone is willing to sell it.
   

Modern market slang

Finally, some ‘shorthand’ sharemarket phrases to describe different types of investment situations.

• FOMO - fear of missing out.
• HODL - hold on for dear life.
• DYOR - do your own research.
• Diamond hands - refusing to sell even during steep declines.
• Bag holder - investor stuck with a losing position.
• Short squeeze - when rising prices force short sellers to buy back shares, pushing prices higher.
   

Conclusion 

Sharemarket language does more than decorate conversation - it shapes behaviour. Words like ‘bullish’ or ‘bearish’ signal collective sentiment that can drive price movement. Terms such as ‘correction’ or ‘crash’ can influence investor psychology. 

Jargon creates an in-group. Understanding jargon empowers people and in this context, it empowers investors. Most importantly, it reflects the human emotions of rationality, optimism and fear – all feelings one can experience when investing or simply making financial decisions.

Whether you’re starting your investment journey or well down the path of financial literacy, we hope the next time you hear “The Fed took a hawkish stance, leading to a correction in equity markets overnight”, you’ll smile knowingly and with confidence. 

For language purists like me, jargon can be challenging to accept, but I encourage you to give it a try. You might just find that a new and colourful language opens your mind to new and helpful ideas - and experiences about investing.
 

From ASX

The Glossary on the ASX website lists provides a comprehensive list of terms and definitions used on the Australian sharemarket.

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[1] Signifies holding volatile investments despite sell pressure (The Motley Fool as at 17 June, 2025)
[2] Originally a typo for hold, it has morphed into an investment strategy from the acronym “hold on for dear life”, echoing a long-term commitment among cryptocurrency enthusiasts (Investopedia as at 6 August, 2025)
[3] ASX glossary
[4] Investopedia, Merriam-webster, Britannica Money
[5] ASX - Introduction to Investment Products
[6] S&P ASX 200 Index
[7] Betashares - dollar cost averaging
[8] Capitalisation
[9] ASX ASX Shares Course 10: Fundamental analysis
[10] Moneysmart.gov.au