Trading Animals in the Share Market

Even if you are a novice investor and have only limited knowledge about stock markets, chances are you have heard about bull and bear markets already. These animal references, which is used to indicate market behaviour, are widely used and well-known stock market jargon. But animal references in stock markets don’t end there. Animals from rabbits to even sharks are part of the share market and all of them have meaning to convey. Through this article, let’s take a look at all the trading animals in the stock market and examine what each of them means.

 

The Bull

A bull is the most prominent and positive animal of the stock market. Bullish means the market is in positive territory with the stock prices increasing and investors putting more money in the market. When bullish, the investors are optimistic about the market and it drives the stock prices upwards. This trend could go on for years at times.

For instance, the period of December end 2011 to March 2015 was considered a bullish period for the Indian market. The Sensex grew more than 98% during this period.

 

The Bear

A bear market is the exact opposite of a bull market. Investors’ sentiment and outlook towards the market is negative and pessimistic during a bearish time, which results in lesser investments. Usually, the market is said to be bearish when there is a downfall of about 20%. This could last for up to months. This period could also occur when a country is going through an economic turmoil that results in job losses which in turn results in lesser investments.

 

The great depression is the most infamous example of a bear market. The housing crisis of 2007 is another instance of a bearish run.

 

The Rabbit

Rabbits are the traders who buy stocks and keep their position for a very short period of time. They are usually intraday traders who are looking for a quick profit. Rabbits might not even hold a stock overnight and they are always on the hunt for quick bucks during the day.

For instance, consider you bought stocks of a particular company at 11.30 am in the morning. You bought this stock because you predict that the stock price will rise in some time. The stock rose as you predicted and at around 2.30pm the same day, you sell them to pocket profit. This is an example of a rabbit investor.

 

The Turtle

Turtles are the exact opposite of rabbits. They are investors who like to stay invested for a longer period of time. They make the least number of trades and they are not bothered about short-term market price fluctuations. Rabbits like to bank on stocks that have the potential to grow in long term and stay invested in them.

For example, consider you bought an IT company’s stock seeing a long term growth. Right after the day you bought it, the stock fell. It continued in the bearish run for some time, but you had belief in the potential of the company, and you stayed invested for a longer time. This is how a turtle investor approaches stock market.

 

The Pig

A pig is an investor who is greedy and emotional. Returns are never enough for them and they ignore proven investment ideologies and try to always earn big. Hence, pigs always end up having a huge loss or a huge profit.

 

If we take the same example above, consider that you have gained a profit in longer term, but you decided to stay invested for a longer time in hope of even more profit. This will make you a pig investor. Here, you could either win big or you will lose the profit you had.

 

The Ostrich

Ostriches are known to have a particular character. They bury their head in sand when times are tough. They ignore unpleasant occurrences and hope that they will disappear. Investors with such an attitude are called ostriches. They ignore the bad market conditions and keep their investments in the belief that the market will come back to normalcy organically with time.

 

Even when you believe that a company has long term potential, you should account for the change in market conditions in your investment decision. Consider you are staying invested in a company for a long time seeing its growth potential. But things, including market conditions, have changed and now the potential looks bleak. Here, if you decided to stay invested ignoring the challenges, you are an ostrich investor.

 

The Chicken

A chicken is a stock market investor who chickens out during tough times. They panic even during the slightest of bear tendencies and make impulsive decisions on their investments. They often forget that volatilities are a part of stock markets and live in constant fear of losses.

 

For instance, a lot of investors redeem all their stocks the minute there is a red in the graph. This will affect their investments and hamper the potential of the investments they had.

 

The Sheep

Sheep are known for their herd mentality and an investor who has a similar attitude is called a sheep. They often follow an investment advice blindly without putting in any thoughts of their own. They are usually not confident in making their own investment strategies and they are always the last to follow an upward trend and leave a downward trend.

 

A perfect example for this is investors who blindly follow podcasters or YouTubers for their investing decisions. A lot of times, there could be no authenticity in these advices, and it could hurt your pocket badly.

 

The Dog

Dogs are smaller stocks in a bigger market. They are beaten down by their poor performance and investors and analysts expect them to recover.

An ideal example for this would be smaller IT companies that are underperforming now. They are not at their best due to competition and poor recognition and they could bounce back when the find their break.

 

The Stag

A stag is a short-term investor – like an intraday investor – who tries to make money through quick and short-term investments. They often require a huge amount of liquid capital and are known to have the ability to turn a bearish market into a bullish one and vice versa.

 

The Wolf

You might have seen the movie ‘Wolf of the wall street.’ It is the story of American stockbroker Jordan Belfort, who plead guilty of scams related to stock markets and wolves are investors exactly like that. They are powerful and often unethical in their ways of making money. They are not reluctant to run scams and frauds to earn more.

Harshad Mehta is the perfect example of a wolf when it comes to Indian stock markets.

 

The Lame Duck

A lame-duck is an investor who is unable to meet their claims of the day and is in debt. Lame-duck is also used to refer to investors who have gone bankrupt.

 

The usage originated from the early days of the London stock exchange when investors are unable to settle the amount they owe at the end of the day. In today’s time, a margin call could be considered an example for a lame duck.

 

The Whale

A whale is an investor, often anonymous, who places an unusually large order in the stock market. Whale orders can change the course of the stock and have a substantial effect on market movements as well. Hedge funds are most associated with whale orders.

 

The Shark

Sharks are investors who lure retail investors to buy obscure stocks offering them high returns. They manipulate stock prices by trading among themselves and when the prices are high enough, they dump the stocks on retail investors and vanish.

 

Dead Cat bounce

A dead cat bounce is a short-lived upward trend of a stock or the market which was bearish for a long period of time. Usually, after the bounce, the stock goes back to its downward trajectory.

A lot of investors consider the recent trajectory of bitcoins as a dead cat bounce. If you take a closer look at their charts, you can see multiple similar trends.

 

Dogs of the Dow                        

Dogs of the Dow, is an investment strategy that tries to beat the Dow Jones Industrial Average (DJIA) by buying the highest dividend-paying stocks each year. First published in 1991, the strategy has a track record of beating the DJI index for 10-years following the financial crisis.

 

Conclusion

Every animal reference used in trading has its own significance. Understanding this jargon is important in grasping vital information about stock markets on a daily basis. Some of these usages act as a strategy and some even as a warning. It is advisable to understand the nuances of stock markets before you start investing to gain the maximum out of your investment. 

 

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