What influences a company's stock price and how to use it in stock trading
When starting to trade on the stock exchange, most traders simply identify the direction of the trend and make a trade in its direction.
But this approach rarely produces good results, as it is difficult to predict how long the existing trend will last.
It is much more important to know what influences stock prices and what will signal the start of a new trend, so that you can be one of the first to enter the market.
In fact, there are quite a few factors that can change the value of shares, but we will try to list at least the main ones.
Factors that influence stock prices:
Profit or loss - most investors prefer to buy shares of profitable companies and sell securities of loss-making enterprises.
Information on companies' financial performance is published quarterly, and it often serves as a signal for the onset of a new trend. Furthermore, the news often includes forecasts for a particular company's performance.
Dividend size – the higher the size of dividends paid, the more willing people are to buy shares and the more actively the price of the security grows.
Stocks with good dividends rise most rapidly immediately after an interest rate increase and shortly before the start of payments.
A stock split —or, in other words, a split of existing stocks. After a split, the price initially declines, but over time, the cheaper securities begin to attract investors, and the price rises.
That's why many people prefer to buy shares after a stock split.
State policy – obtaining government orders for production, adopting laws to protect producers, and other similar measures.
These events typically result in higher profits, so the release of such news stimulates stock prices. This factor is often the most significant factor influencing stock prices.
Sanctions are aimed at a specific company or an entire industry. Such an event literally collapses the stock price, as it leads to a reduction in production.
Price increase or collapse – if the increase in prices for manufactured products occurs as a result of increased demand, such an event will definitely form an upward trend.
At the same time, a fall in prices is always a signal to sell, and the securities of the company producing the cheaper products begin to decline in price
Positive news and negative news - other news items not listed above can also affect stock prices.
This can be positive news, pushing the stock price upward, or negative news, causing a virtual collapse.
I hope I've answered the question "What influences stock prices?" All you have to do is wait for the events mentioned above and make a trade in the right direction.
