 STOCK MARKET TRADING
Factors
Affecting Stock Market Trading
The first factor
that comes to mind is the changes in the structure of the
stock market. For instance, the new wave of online investors
has contributed to a growing interest in the U.S. trading
markets. With ECN consolidation deals to the NYSE teaming up
with Archipelago, the structure of the stock market is
changing rapidly. Other factors which affect the stock
market are economy, business activity, technology, and
investor psychology.
General Stock
Market Trading Psychology
Investor
psychology plays a major role in the volatility of the stock
market. By volatility, I refer to the dynamic price swings
stocks and indexes show during the trading session. The
latest psychological trading effects come from new investors
and players listening to stories of how their friends have
made a “killing” buying XYZ shares 7 years ago at $4 and now
xyz stock trades at $150.
These new investors who were
“left out” want in now, and they want to make all the money
they “missed” in a short period of time. This has fueled the
stock market during the bubble years, and no one knows when
it will fuel it again in the future.
Stock market
trading psychology plays a major role in what will become a
hot sector and which hot sector will cool down.
Investors like the big companies. These are the companies
they are familiar with. Therefore, they will buy those
stocks. To summarize this section, I will compare the stock
market to fashion. One season leather is “in”, the next
season it is flannel they want. The consumer determines the
colors and patterns to be “in” that season and it is the
same in the stock market. Investor psychology determines the
hot and cold stocks. Similar to fashion, the stock market is
always changing as investors search for the greatest profit
potential.
All of the content published on
this website is to be used for informational purposes only
and without warranty of any kind. The materials and
information in this website are not, and should not be
construed as an offer to buy or sell any of the securities
named in these materials. Trading of securities may not be
suitable for all users of this information.
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