Shares trading is a popular choice among traders who want to take a position directly on individual companies. From technology and telecommunications to health care and utilities, shares trading offers endless options in terms of sectors and risk levels.
Trading profits are generated by buying a share at a low price and selling it at a higher one or by selling at a high price and buying at a lower one, if you think that the share of a company will decline.
Currencies fluctuate in value against each other 24 hours a day. As a rule of thumb, companies who import benefit when the currency of their country rises as their purchasing power rises too.
Companies who are dependent on oil for the conduction of their business, such as airlines, are the first to be affected by significant or unexpected changes in the price of oil.
Let’s take tax policy for example. Should a country change its laws on corporate tax, this will have a direct effect on the profitability of the companies based in the territory.
Interest rates are determined by the central banks and reflect the cost of capital. A cut in interest rates, for example, can give stock markets a significant boost.
Sometimes an event, such as an interest rate cut, might not even take place, but the stock markets can move significantly just because of the expectation. Should the event not materialize, the markets return to their usual trading levels. That’s exactly where the saying ‘buy the rumour, sell the fact” stems from.
In this category fall terror attacks and natural disasters. The September 2011 attacks caused the stock markets to plummet, with the Dow Jones losing as much as 7% on the day following the tragic event.