How to increase and decrease the share price in the share market
portion holder information of the share market
70% of individuals other than the company choose long-term investment in the share market because it is safer and less risky, with the remaining 10% being general traders and 20% players. 🙋 Most of you may think that speculators has nothing to do with long-term investors, but in reality, speculation is often done with long-term investors. and the speculator's target is long-term investors.
Details about the speculators are given on the previous page reed now
Trading methods of speculators
The speculation trading system is based on the Inside news that speculators knew before the general public knew, Inside news is secret information about a company or government
If the speculators know the good news about a company before the general traders know it, the speculators will buy the shares of that company and when the news comes out that the share price will go up then they will sell those shares and make a profit. similar, If the speculators know the bad news about a company before the general traders know it, the speculators will be selling the shares of that company and when the news comes out that the share price will go down then they will buy those shares and make a profit, It was hoped that this company would come in the future.
Examples of increase and good news reaction
Suppose, for example, that a trade agreement is entered into between India and the European Union, on the basis of which the European Union issues an acknowledgment document for importing fabrics from India.
If the share price of the textile manufacturing companies in India is going up now, so far the fabric manufacturing companies may or may not have paid the dividend but now the company will pay extra dividend plus interest to the shareholders as it will get more profit.
simple calculation method
For example, the price of that share is now $150 , the Face value is $100 and the interest on that share is 6% so far the company has not paid dividends, It can be assumed that the company will offer a dividends of $40 after the issuance of the document, based on that calculation if the speculators have 1000 shares, of which they can sell 500 shares to long-term investors for $250. This means that if investors pay $250 and buy those shares now, their investment will double in 10 years.
| particular | amount | |
|---|---|---|
| 10 year dividend returns (40 * 10 ) | 400 | |
| 10-year interest returns (100 * 6/100 = 6 * 10 ) | 60 | |
| secure principal amount | 100 | |
| 10 years of share market income (100 * 6/100 = 6 * 10 ) | 560 | |
The profit of this speculators is $ 50 000 (150 - 250 = 100 * 500 )
After 5 years long-term investors sell those shares on the share exchange for $ 300 and their profit is $50.
🙋 Most of you may think that none of this is a loss
please wait ....
Examples of decrease and bad news reaction
After 7 years, if investors find that the contract has been canceled due to a Regime change or some other reason, they will sell the remaining 500 shares at a lower price on the market. When the news came to the public the share price would fall because the company had so far provided dividend as it was profitable but dividend will no longer be offered,
simple calculation method
For example, the share price is now 300 rupees, the Face value is 100 rupees and the interest on that share is 6% and the company no longer pays dividends. Based on these details $300 would not be a good investment to buy those shares because the return on that share would be $6 and the return on investing $300 in a bank would be $18, Therefore, the value of the share in the share market decreased from 300 to 150 ....
| particular | amount | |
|---|---|---|
| speculators profit 7 years ago | 100 | |
| Investor profit 2 years ago | 50 | |
| Now the holder of those shares has a loss of | 150 | |
With this, 🤵 you have the idea, that when more shares are bought in the share market it gives good news and when more shares are sold in the share market it gives bad news. This is a bad idea 🙅 because it may even be the plan of some game player. So you have to be careful. We will see about this on the next page and if you have any doubts please post your comments below.
Please answer this question
What is the main reason for the volatility of a share ?
- inside news
- return of investment
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