Factors affecting stock prices

Like any other commodity, stock market prices also depend on many factors. Thus, it is difficult to single out only one or two factors that affect stock price. There are some other factors that directly affect the share price.

Demand and supply – This fundamental rule of the economy also applies to the stock market. The price is directly affected by the trend stock market trading. When more people buy a particular stock, the price of that stock rises, and when more people sell it, the price of that particular stock falls. It’s hard to predict a market trend right now, but your stock broker can give you a clear idea of ​​a steady market trend, but be careful before blindly following the advice.

News – The news is undoubtedly a huge factor when it comes to stock prices. Positive news about the company can increase interest in buying in the market, and a negative press release can ruin the outlook for stocks. Having said that, you should always remember that often, despite surprisingly good news, stocks can show the slightest movement. More important than the news is the overall performance of the company. It is always wise to wait and observe policies in a volatile market or when there is a mixed reaction to specific stocks.

Market capitalization – If you try to guess the value of the company by the price of shares, you make a big mistake. This is the market capitalization of the company, not the stock, which is more important when it comes to determining the value of the company. You need to multiply the share price by the total number outstanding shares in the market to get the market capitalization of the company and that is the value of the company.

Earnings per share – Earnings per share – is the profit that the company received per share in the last quarter. Each open company must publish a quarterly report showing earnings per share of the company. This is perhaps the most important factor in deciding the state of any company, and they affect the buying trend in the market, leading to an increase in the price of that particular stock. Therefore, if you want to make a profitable investment, you need to monitor the quarterly reports of companies and carefully study the possibilities before buying shares of specific shares.

Value for money – The price / earnings ratio or P / E ratio gives you a clear idea of ​​how a company’s share price is compared to its earnings. If the stock price is too much lower than the company’s profit, the stock is undervalued and it may rise in the near future. On the other hand, if the price is too much higher than the actual profit of the company, then stock as they say, inflated, and the price can fall at any moment.

Before we end this discussion of stock prices, let me remind you that there are many other reasons for falling or rising stock prices. In particular, there are specific stock factors that also play a role in stock prices. Therefore, it is always important that you conduct your research and trade stocks based on your research and the information you receive from your broker. Therefore, to benefit from effective consulting services, it is always better to turn to professional stock trading companies than to be enticed discount brokerage advertising that you have to face every day.