Stock Price Factors - What Moves You?
The stock market is a living thing. It is continuously moving and changing. It is affected not only by the success of the companies that are listed, but also by its environment. When you are able to recognize stock price factors, you will be able to improve your performance in the stock market. If you recognize and understand these stock price factors, it will help you decide whether the price movement is a buy, sell or sit tight signal. Some of the things that can be stock price factors are business dynamics, market sector variations and market changes.
This is the most direct stock price factor for a companyís share prices. An economic change in the fundamentals of a business will immediately affect the price. In a form of business inertia, a stock that is on a strong rise with no decay in business dynamics will continue to rise as investors bid up the price of a hot stock. The opposite is also true, a company whose profits are flat or falling without a visible change in business dynamics will continue to fall as investors abandon the stock
Both directions are examples that reflect changes in business dynamics. Other changes can occur which have similar effects. These would be things such as negative cash flow, strategic acquisitions and the similar events. The idea is that underlying factors can be stock price influences on the company and its share value. Successful traders are the ones who are able to identify the stock price factors creating the price changes and react appropriately.
Market Sector Variations
Sector changes, especially in the cyclical stock sectors, can also be either positive or negative stock price factors. Cyclical sectors will typically react in a repetitive manner; because of this, when an entire sector rises or falls, even the companies in that sector not leading the movement will likely be affected as they are pulled along in the momentum of the sectorís movement. In an example that is both positive and negative, the Internet companies of the 1990ís are perfect pictures of stock price factors that are influenced by sector changes. Fundamental analysis in such instances becomes important as in investors attempts to determine if the stock price influences are a temporary move in the sector or an indication of a problem within a particular company or the entire sector.
It is good to remember that there is nothing certain about the stock market. The market will rise and the market will fall and thatís about that you can say with any degree of certainty. With market swings and their influence as stock price factors, it is important to have a stock trading system such as Japanese Candlesticks in place. A proven, powerful system such as Candlesticks can assist investors to chart movements in the market and determine whether they are going to influence stock prices and if so, what effect they will have.
The conclusion is somewhat simple. There are forces at work that serve as stock price factors. Being able to read these factors and translate the results into your stock trading plan is an important part of successful trading. Utilizing a system such as Japanese Candlesticks can help you to make correct reads on stock price influences and implement more profitable trades. The rest of the equation is how you read stock price factors and how they move you and your stocks.