Factors affecting stock prices

Like any other commodity, stock market prices are dependent on so many factors. Therefore, it is difficult to single out just one or two factors that affect the price of the shares. There are still some factors that directly affect stock prices.

demand and supply – This basic rule of economics also applies to the stock market. The price is directly influenced by the trend stock exchange trading. When more people buy a particular stock, the price of that stock goes up, and when more people sell the stock, the price of that particular stock goes down. Now it is difficult to predict the trend of the market, but your stockbroker can give you a good idea of ​​the ongoing trend of the market, but be careful before following advice blindly.

news – News is undoubtedly a big factor when it comes to stock prices. Positive news about a company can increase buying interest in the market, while a negative press release can ruin a stock’s prospects. However, you must always remember that despite amazingly good news, a stock can often show the slightest movement. It’s the company’s overall performance that matters more than news. It’s always wise to adopt a wait-and-watch policy in a volatile market or when there is mixed reaction to a particular stock.

market capitalization – If you’re trying to guess the value of a company based on its stock price, you’re making a big mistake. It’s the company’s market cap and not the stock that is more important when it comes to determining the company’s value. You need to multiply the stock price by the total number of shares outstanding Stocks in the market to get a company’s market capitalization and that is the value of the company.

earnings per share – Earnings per share is the earnings the company made per share in the most recent quarter. Every public company is required to publish the quarterly report showing the earnings per share of the company. This is perhaps the single most important factor in deciding the health of a company and affects the buying bias in the market, causing the price of that particular stock to rise. Therefore, if you want to make a profitable investment, you need to keep an eye on company earnings reports and study the opportunities before buying shares in specific stocks.

price-earnings ratio – The price-to-earnings ratio, or P/E ratio, gives you a good idea of ​​how a company’s stock price is performing relative to its earnings. If the stock’s price is too much lower than the company’s earnings, the stock is undervalued and has the potential to rise in the near future. On the other hand, if the price is way too much higher than the company’s actual revenue and then the warehouse is considered overpriced and the price can fall at any time.

Before we wrap up this discussion of stock prices, let me remind you that there are so many other reasons why stock prices go down or up. Above all, there are stock-specific factors that also influence the price of the stock. Therefore, it is always important that you do your research well and do stock trading based on your research and information you get from your broker. Therefore, in order to benefit from the effective consulting service, it is always better to visit professional stock trading companies than to be lured by them discount brokerage Ads you must come across every day.