The stock market is a highly volatile market. There are a lot of traders trading on the many different types of stocks and assets. It is a market that is subject to changes every now and then owing to the changes in the market conditions. The prices of the assets keep changing and hence it becomes very important for all the traders to keep an eye on the market to play safe. Now before looking into the various reasons that cause these fluctuations, it is important to know the right understanding of these fluctuations. This would also help in understanding the impact of these fluctuations on businesses and organizations who are also a part of this market.
- Industrial and business news – this is a factor to be understood to understand the reasons for fluctuations in the stock prices. When two companies belonging to the same market show and sell their products or services at different prices, there are all possibilities for prices of one to go up and the other naturally falls down. For example, let`s take the phone industry. In the initial days, it was only the traditional phones and the phone lines that were the mode of communication. But the invention and introduction of cellular phones gave a great hit to this industry thereby impacting and affecting the business of the traditional phones. This also led to the failure of many telephone companies or they took to shifting their preferences to the cellular industry.
- Legal environment – this is another important thing to be noted when comes to understanding fluctuations in stock prices. Take the drug industry for example. When the food industry disapproves or disagrees with any new drug from entering into its borders, the drug industry takes a huge hit. So this way the business of the druggists goes down.
- Before making any investment into a stock or an asset, it is important for an industry to study the market and the market players. This would give a clear idea about the changes in the company`s performance and the same can also be compared with the other company`s performances and successes in the market.
So these are some of the major things that every person should take into account when he wants to learn about the stock market and the reasons for fluctuations. A better understanding of this would help a trader in analyzing the reasons for the fluctuations in the prices.