As global markets reel from the intensifying trade war and growing fears of a recession, headlines are flooded with financial jargon that can feel overwhelming — especially in times of volatility. With U.S. President Donald Trump doubling down on tariffs and uncertainty rattling investor confidence, understanding the language of market turbulence is more important than ever.

Below is a glossary of key market terms to help you navigate the chaos with confidence:

Bear Market

A bear market traditionally means a decline of 20% or more in a stock index, signaling a broad crisis of investor confidence. Some experts argue for a more nuanced view — like a secular bear market, marked by extended volatility and economic challenges. The term may come from the bear’s fighting style — striking downward — or 18th-century trading of bear skins.

Black Swan

A black swan is a rare and unpredictable event with massive consequences — like a financial crash or pandemic. Coined by Nassim Nicholas Taleb in 2007, it stands in contrast to a white swan (predictable) or gray swan (foreseeable but unlikely). These events can reshape entire markets.

Buying the Dip

This refers to purchasing stocks after a significant drop, with the hope they will rebound. It’s a popular long-term strategy — but risky in uncertain times. As Roundhill Investments’ CEO put it, “buying the dip is like buying discounted tickets to a show without knowing who’s performing.”

Circuit Breakers

When markets fall too fast, circuit breakers are triggered — halting trading temporarily to prevent panic-driven collapses. These are automatic and apply to exchanges or specific stocks when price thresholds are breached.

Contagion

In finance, contagion describes how panic or losses in one market or asset class can spill over into others — often regardless of fundamentals. It’s a ripple effect that can amplify volatility across regions or sectors.

Correction

A correction is a decline of 10% or more in a stock or index from recent highs — but it’s considered temporary. Unlike bear markets, corrections are often short-lived and may even present buying opportunities.

Crash

A crash is a sudden, dramatic drop — often double digits — in stock prices, usually triggered by panic. Examples include Black Monday (1987) and the 2008 financial crisis. Crashes often lead to bear markets and are the reason behind circuit breaker mechanisms.

Safe Haven Assets

When markets fall, investors seek refuge in safe haven assets — instruments believed to retain value during turbulence. Examples include gold and certain government bonds, which are considered more stable amid volatility.

Margin Call

Margin trading involves borrowing money from a broker to buy stocks. If the value of those stocks falls too low, the broker issues a margin call, requiring the investor to either add more collateral or repay the loan — often forcing sales during downturns.

Short Selling

Short sellers bet on a stock’s decline by borrowing shares and selling them, then buying them back at a lower price. If the stock rises instead, short sellers incur potentially unlimited losses, making it a high-risk, high-reward strategy.

VIX (Volatility Index)

Known as the “Fear Index”, the VIX measures expected volatility in the U.S. stock market over the next 30 days. Based on S&P 500 options, it’s widely tracked as a sentiment gauge, spiking when fear grips the market.

In times of extreme volatility, knowledge is one of the best tools an investor can have. Understanding these key terms won’t prevent market swings — but it will help you make smarter, more informed decisions. Whether you’re a seasoned investor or new to the game, knowing what’s happening — and why — is the first step to staying ahead of the storm.