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Stock is equity or a share or financial instrument that signifies ownership in the company. And, the stock market is a market where buying, selling, and issuance of publicly held companies take place.
Here, we will discuss some top factors which influence the stock price lines. But before that, let us clear some basics.
WHY ARE STOCK MARKETS SO VOLATILE?
Volatility in the stock market is a normal thing and risky too at the same time. However, over the years, it has verified its success also.
The volatility is because of several activities, not particularly in the economy but on other varied factors like election, speculation, interest rate and changes in related markets.
In the long term, this volatility has proved to be a friend and not a foe for stock traders.
FACTORS THAT AFFECT STOCK MARKET
There are varied factors that affect the functioning of the stock market. These factors are listed below:
- Supply and demand
It is a fundamental factor out of all the factors that affect the stock market. Changes in the level of demand or supply can either raise or lower the price of shares.
For instance, when a company performs exceptionally well, the requirement of its shares would increase more than the supply, which could increase its price and vice versa.
- Organizational Factors
It includes not only profits but also its goodwill,
Management issues, acquisition, mergers, product success or failures, etc. Any favourable event can turn the prices up and vice versa.
- Investor’s sentiments
Here is one crucial factor that most affects the functioning of prices in the stock market. The speculative motive of the investor causes a significant influence on the prices.
For example, if there is hype created by speculators for a potential (FAKE) uptrend, then more novice traders buy and thus, the share value goes up.
- Political situation
This factor mainly plays its role during elections. If the government appears strong, stable, and has well public support, then stocks tend to go up. While in case of weak, coalition or government with comparatively less federal support, then stocks might go down.
- Natural calamities
Natural calamities like earthquakes, floods, and tsunamis can drastically reduce the stock value.
- Current events
Current events like wars, civil riots, and emergencies have a direct and proportional effect on stock prices. While favourable circumstances might increase the price, unfavourable events decrease the share value.
- Interest rate
Lower interest rates are more attractive for investment in the stock market as they encourage investors to invest in the stock market and have scope for healthy economic growth.
These are the significant factors which influence the stock trading market. All of them create several pitfalls as well as opportunities. One with the right skillset makes a reasonable amount, and another who is not aware of unskilled might lose money too. As well said by Warren Buffett,
“Look at marketplace fluctuations as your friend rather than the enemy; profit from folly rather than participate in it.”
Brokers play a crucial part in stock trading. A right broker aids the traders in earning while the wrong one prioritizes his profits first.
Why Trade with 101Investing?
Licensed: We are regulated under the financial body of Cyprus, CySEC (Cyprus Securities & Exchange Commission) under the license number 315/16. FXBFI Broker Financial Invest Ltd operates us.
Awards: We have won several awards and recognitions for our services and products. The list includes
Best FX Broker Europe 2020.
Best New Broker in Europe by A+OZ.
Best Cryptocurrency Broker by World Finance.
Safety: We make sure the client’s funds and data is utterly secure with us. With our robust security software and servers, you do not need to worry.
How to Invest in Stock Trading with 101Investing?
Open an Account: Fill the necessary details, provide the required documents, and verify yourself to start trading with us. It hardly takes 15-20 minutes.
Research: Once you have the account credentials, start your research. One can read books, articles, videos, courses, as well as learn tools, indicators, signals, etc. to develop their knowledge stack. You can check our educational portal too for these kinds of learnings.
Trade: Start buying and selling of financial instruments after depositing the minimum amount. One can choose from a variety of tools as per needs.
Rounding Up
101Investing broker offers a variety of tradable assets which includes stocks, forex pairs, indices, commodities, and cryptocurrencies. Some of the advantages of trading with us are high leverage, free demo account, popular trading platforms, smooth UI, and many more.
Any trader can contact us through telephone, email, or live chat. The contact support is available for 24/5, from Monday to Friday.
Open a free demo now with this link: 101Investing.com
