Share prices can be affected by numerous internal and external factors. The performance of the company has the biggest impact, as this will affect demand for its stock.
If a company releases its annual results, announcing a large drop in profits, investors may rush to sell their shares, which can lead to a sharp decline in the price.
Mergers and acquisitions can also have an impact. If a business is about to acquire a competitor in a major international transaction, its share price may rise as more investors look to get a piece of the action.
On a wider scale, the general economic environment can manipulate the price of shares. If investors are feeling nervous and tetchy during a recessionary period, they may be more likely to offload their shares.
Even seemingly unrelated events, such as terrorist incidents and natural disasters, can affect the markets by influencing investor sentiment.
Keeping a close eye on company performance and current affairs is therefore essential when spread betting on shares. Listening out for rumour and speculation can also help you stay one step ahead.
The key to successful trading is research and having solid tactics and risk management; remember shares can go up or down and the use of leverage means any losses (or profits for that matter) could be amplified substantially.