Like any other commodity, in the stock market, stock prices also depend on many factors. Therefore, it is difficult to single out just one or two factors that affect the stock price. There are still some factors that directly influence the stock price.

Demand and supply – This fundamental rule of economics is also valid for the stock market. The price is directly affected by the trend of stock market trading. When more people are buying a certain stock, the price of that stock increases and when more people are selling the stock, the price of that particular stock falls. Now it is difficult to predict the market trend, but your stock broker can give you a clear idea of ​​the current market trend, but be careful before blindly following the advice.

News – The news is undoubtedly an important factor when it comes to the price of the shares. Positive news about a company can increase buying interest in the market, while a negative press release can ruin the outlook for a stock. Having said that, you should always remember that many times, despite surprisingly good news, a stock may show the slightest movement. It is the overall performance of the company that matters more than the news. It is always wise to wait and watch the policy in a volatile market or when there is a mixed reaction on a particular stock.

Market cap – If you are trying to guess the value of a company from the stock price, you are making a big mistake. It is the market capitalization of the company, rather than the shares, that is most important when it comes to determining the value of the company. You must multiply the share price by the total number of stocks in the market to get the market capitalization of a company and that is the value of the company.

Earnings per share – Earnings per share is the earnings that the company obtained per share in the last quarter. It is mandatory that every public company publishes the quarterly report that indicates the earnings per share of the company. This is perhaps the most important factor in deciding the health of any company and influences the buying trend in the market, resulting in the increase in the price of that particular stock. Therefore, if you want to make a profitable investment, you should keep an eye on the quarterly reports that companies and analyze the possibilities before buying shares of stocks in particular.

Price / earnings ratio – The price / earnings ratio or P / E ratio gives you a clear idea of ​​how a company’s stock price compares to its earnings. If the share price is much lower than the company’s earnings, the stock is undervalued and has the potential to rise in the near future. On the other hand, if the price is much higher than the real income of the company and then the stocks It is said to be overvalued and the price can fall at any moment.

Before concluding this discussion on stock price, let me remind you that there are many other reasons behind the stock price falling or rising. There are especially stock-specific factors that also play a role in stock price. Therefore, it is always important that you do your research and trade stocks based on your research and the information you get from your broker. Therefore, to benefit from an effective consulting service, it is always better to have professional stock trading companies rather than be seduced by discount brokerage Ads that you must find every day.