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The Volatile Stock Market Occurs Due To Several Factors

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The volatile stock market is one that you must know. As an investor, every investment is expected to have stock or forex volatility.

But to know it more clearly it’s good if you know what volatility means. So for investors it will be easier to carry out the activities to be carried out.

Know What The Volatile Stock Market Really Is

As an investor who has been around for a long time, you will understand what the term volatility is. The term volatile stock market often relates to the risk and uncertainty of current price changes.

The definition of volatility itself is the statistical change in the price of a security in a certain period. As an investor, you will often hear the term when investing in stocks and foreign exchange.

Also Read: Examples of Stock Market Sentiment and Indicators to Calculate It!

The high and low levels of volatility can affect the movement of market prices. When the value is higher, the changes or movements that will occur are also faster.

In addition, this volatility is also useful as a reference in estimating opportunities or risks, it’s just not a definite benchmark. Stock volatility itself is the result of calculating the annual standard deviation. The purpose is useful for measuring the level of stock risk in the next period.

If you want to profit from short term stock transactions. It is better to choose stocks with high volatility, because the price of course tends to rise even though the risk is quite high.

Causes of Volatility

Volatile stock markets are common. In the world of investing there are many terms that you can use. One of them is volatility.

Where this happens due to several factors causing it. The following are some of the factors that cause volatility to occur.

Also Read: The Largest Stock Market Capitalization on the IDX Reaches Up to 10 Issuers

Economic and Political Factors

One of the causes of a volatile stock market is due to economic and political factors. There are several things that can happen, namely consumer spending figures, inflation data, employment reports and many others.

Apart from the economy, politics is also a factor that can influence the occurrence of volatility. For example, from the environment and the implementation of elections.

Also Read: Causes of the Stock Market Shaking, Taper Tantrums Finished Early

Sector and Industry

Running an investment is not easy. However, when you are in a volatile stock market there is a reason why this happens.

Apart from the first factor, it turns out that the sector and industry are the second things that affect future income. More and more government regulations are binding on the industry.

This will cause the stock price to fall. Some industrial activities and expenses for employees are also the reason.

Several announcements from the industry were the cause. Starting from trading delays, insider trading and many others.

Actually, the causes that can lead to a volatile stock market are still quite a lot, including company performance and announcements of cooperation.

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