Bitcoin trading and important tips when trading in volatile markets
On December 17, 2017, Bitcoin reached its peak and was valued at about $ 20…
Stock markets are affected by many factors, whether economic or political, which forces investors to respond quickly and react to new market changes. Understanding the types of economic and political factors that affect the market as well as how they affect the market can go a long way towards improving your profitability as a trader.
Politicians’ decisions and statements can have a direct or indirect impact on business and thus on stock prices, for example, changing taxes on imports and exports, product subsidies, presidential elections, etc.
Political shocks and turmoil can lead to big fluctuations in stock prices, such as decisions about wars, leaks of important information, the imposition of sanctions, etc.
In general, the more stable the political situation in the country the more favorable the conditions are to invest in the stock market, because political uncertainty increases the risks related to investing which makes investors prefer to move away or withdraw their money to invest in safer markets.
The economic factors in many cases are the major drivers of the fortunes of the stock market, whether in specific sectors or across the market as a whole. The more you understand the economy, the more likely you are to succeed as a trader.
Stock prices are affected by the extent to which the interest rate changes, meaning that higher interest rates indicate that money becomes more expensive to borrow to compensate for higher interest costs, and companies may have to reduce spending rates or lay off workers which will have a negative impact on corporate profits and thus stock prices will decrease.
When the inflation rate is low, the stock market responds by increasing sales, while high inflation makes investors believe that companies may reduce spending rates which leads to lower revenues in all areas, and thus the stock market will decline.
GDP is a general measure of a country’s economic health, and GDP can have a significant impact on investment returns.
Gross domestic product means the total amount of services and goods produced in a particular period within a country, and includes all public and private consumption rates, government expenditures, investments, and the rate of exports minus the imports that occur within the state.
The economic health of the country affects the stock market returns greatly, and that is why any change in the gross domestic product, either up or down, will have an impact on the direction of the stock market.
Another strong indicator affecting stock markets is the unemployment rate, which shows the development and strength of the economy.
The jobs report and unemployment rates are important measures of the health of the economy as a whole. Basically, the number of people with jobs equates to higher economic output, retail sales, savings, and corporate profits. As such, stocks generally rise or fall with good or bad employment reports.
Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.
Ad / Affiliate Disclosure
At BrokerTrending, we go the extra mile to help global investors make informed decisions – investing an obscene amount of time daily in testing and researching online brokers. But how do we keep running? Our partners show their appreciation by rewarding us with paid advertising, So, we have advertising relationships with some of the firms and products mentioned on this website, and may be compensated though a commission if consumers choose to click these links in our content, with no additional cost to you. However, BrokerTrending provides comprehensive material and information tailored to the best interests of customers, compiled through our specialized professional rank method that ensures unbiased results regardless of partner remunerations.