4 Factors That Affect The Success Of Trading

Trading is an excellent way to improve your portfolio and generate financial prosperity. However, the success of it all depends on a number of factors.

To be smarter when buying and selling stocks, it’s worth familiarising yourself with some of these influences. That way, you’re less likely to be caught off guard by sudden changes in the market.

Investor Emotion

Something that can have a surprising impact on trading success is investor emotion. If a lot of people become worried that a market is going downhill, they’ll typically sell to try and avoid significant losses. However, the more investors that do this, the worse the situation becomes, which is what can then start a recession.

The opposite can also happen, with trading becoming more profitable when people become hopeful about the market’s future. As they seek to get in on the action early, their positive purchases help to strengthen trading again.

World Events

Trading doesn’t happen in a bubble. External factors play a huge role in how stocks fare, particularly if they’re significant world events.

Something like civil unrest, natural disasters, or a terrorist attack can causes stocks to diminish in the areas they impact. Given how global trading can be nowadays, this can obviously affect your portfolio if you do a fair amount overseas.

This is one of the risks that comes with expanding your trading to foreign markets. However, such devastation can still happen close to home, and given the upsides of overseas trading, these world events shouldn’t put you off branching out.

Latency

Time is often of the essence in trading. Sometimes, a millisecond too long can make all the difference between a profit and a loss, which is why low latency is ideal.

This is affected by numerous factors, some of which you can’t always control, meaning it can be hard to get the latency you desire. However, something you can control is the brokerage service that you use.

For a lower latency, an execution-only broker like Global Investment Strategy is the way to go. If you’re wondering how is a trade executed as quickly as possible when so many influences come into play, they have the answers for you. Having executed hundreds of thousands of transactions over the last 10+ years, they’ve got the knowledge and experience that can help make trading more successful for you.

Company/Industry Performance

Share prices will naturally rise and fall depending on how that company performs. If they announce a new product with a lot of buzz, their stocks will increase. If they get involved in a scandal, they’ll decrease.

However, it’s not just one company’s performance that can affect this. The performance of the industry they’re in can also change things for better or worse. That’s why it’s worth keeping an eye on the competition when thinking about who to invest in. Even if you don’t want shares in those companies, their actions could still sink or swim your profits.

Along with what’s listed here, there are other factors that can also influence trading. It’s worth getting to grips with as many of these potential impactors as possible. That way, you should have a better idea of when things are likely to change, even if you still can’t predict anything a hundred percent.