Why Stock Prices Fluctuate Daily – 3 Main Reasons Affecting Share Prices

Why Stock Prices Fluctuate Daily – 3 Main Reasons Affecting Share Prices

Not sure what keeps the share prices changing on daily basis? These are the reasons why.

Demand and Supply

In stock market, the stock price will fall if number of sellers is greater than the number of buyers. On the other hand, if there are more investors want to buy the stock than the number of sellers who are willing to sell their holdings, the price will increase. This is just a typical example of demand and supply curve. The next question would be what will drive the demand and supply?

Market Psychological Effect

Demand and supply of the available shares to be traded is principally due to market sentiment. Whenever investors and traders feel the stock is not able to meet their expectation, they will sell their equities as soon as possible. Whereas, if they are optimistic of the future growth, they will be buying more shares of that stocks. But, what cause the market to change?

Unfortunately, there is no single answer to that question.

However, the most obvious factors include inflation, interest rates, energy prices, quarterly earnings reports, news on corporate events, war and terrorism, crime and fraudulent as well as political instability. Remember, when it comes to market sentiment, media plays the major roles. To make the news popular and gain most viewers, good things can be interpreted as bad actions sometimes. So, filter the information very carefully and do not let media influence your investment decision.

Individual Investor Needs

This is the most difficult one to detect but is the main reason why stock prices fluctuate daily. Look, every now and then, investors who buy the stock have pre-determined price to sell even before they purchase the shares. As a result, even if everything remains the same, the share prices may fluctuate due to their activities. Moreover, seasoned investors have trading tools to detect when they should buy or sell for maximum profits but minimum risks. You can also take advantage of the daily price fluctuation if you understand how technical analysis works.

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