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Factors That Move Stock Prices Up & Down

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Factors That Move Stock Prices Up & Down

Many people directly jump into buying & selling shares after opening their trading account without knowing how the stock prices move. For successful trading, one important part is understanding the movement of the stock prices, which we will let you know in this piece of content.

In the stock market, the share prices are decided where seller supply meets buyer demand.

The fluctuations in the share prices play a major role in the trader’s profitability. If the stock prices remain stable, then the traders won’t be able to earn a good profit, and thus up & down in the prices of stocks is necessary.

The stock prices live change based on various factors, and here, we will elaborate on those factors to help the traders make some profits. When you invest your Capital into the stock market, you need to be aware of this situation.

Traders can understand those factors and accordingly make a trading plan to get returns on their money.

3 Major Factors Affecting the Movement of the Stock Prices

  1. Fundamental Factors

When talking about the fundamental factors, the two major ones are profitability and valuation (P/E ratio).

A person who purchases the stock gets the right for its earnings and the EPS, i.e., the Earning Per Share. Companies then distribute dividends to the shareholders, and the company invests the remaining earnings in the business.

If the valuation is the topic, the value multiple communicates expectations for the future. A lower multiple for the stock will result in a higher discount rate, but a higher growth rate will result in a higher multiple.

  1. Technical Factors

The technical factors have a major role in the movement of the stock prices. External variables influence the supply and demand for a company’s share. Some of the circumstances are so severe that they even affect the basics.

One of the key technical considerations is – Inflation. If the inflation level is low, we may see an increase in stock prices.

  1. News

News plays a major role in the share price movement, but quantifying its effect may be difficult.

It is well known to those involved in stock trading that even a single news item can move the market and stock prices in either direction. Whether it is news regarding the geopolitical situation, global economy, mergers & acquisitions, etc., all affect the individual shares and stock market.

As the trading of shares happens worldwide and markets & economies are interconnected, and thus the news in one part of the globe may affect the share prices all around the world.


In conclusion, we would say that before starting trading in the stock market, one must know some crucial things, and the factors that affect the prices of the stocks are one of them. The share prices and stock market are sensitive to many factors and react quickly to those factors. We have mentioned some major factors contributing to the movement of the stock prices.

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