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Trading Glossary

Glossary trade refers to a type of trading strategy where traders use a predefined set of terms, definitions, or concepts to make informed decisions. It often involves industry-specific jargon, financial metrics, and analytical tools to navigate markets effectively.

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Imports

Imports are the foreign goods and services bought by residents, companies, or governments. A car shipped from Japan is a goods import. Software support provided by an overseas company is a services import. Economic reports compare imports with exports to help calculate the trade balance. Imports are also subtracted when gross domestic product is calculated, because the spending may already appear under consumption or investment even though the production happened abroad. The subtraction prevents foreign production from being counted as part of domestic output.

In Neck

In Neck is a two-candle pattern that appears during a falling market. The first candle is strongly negative. The second opens lower, recovers slightly, and closes near the first candle’s close. Buyers managed a small response but could not reverse much of the earlier decline. Technical analysts may treat this as a bearish continuation pattern. It is similar to the On Neck and Thrusting patterns, but their second candles close at slightly different levels. Because these differences can be small, the wider trend often matters more than the exact pattern name.

In-the-money

Refers to an options contract that would be profitable if it were exercised immediately.

Income Return

The return on an investment derived from the income it generates, such as dividends or interest.

Index

A basket product that measures the performance of an entire market or products of a similar nature.

Index components

Index components are the individual securities included in a market index. The S&P 500 contains shares from large US companies, while the IBEX 35 contains selected Spanish stocks. Components do not always have equal influence. In an index weighted by market value, larger companies affect the result more than smaller ones. The list may change when a company is acquired, removed from the exchange, or no longer meets the index rules. Funds that follow the index may then need to sell the removed company and buy the new one, sometimes creating extra trading activity around the change date.

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