Last Updated on Dec 19, 2019 by James W
So what exactly affects the stock market? Is it the relationship between political conditions or the new laws that are placed by our president? In all honesty, politics has a small effect on the stock market. It may change things temporarily, but not enough to keep investors worried.
For example, the election of President Trump. During this time investors were excited about rollback regulations and corporate tax reform. However, short-term changes do not seem to affect the market like it used to. We find that the impact of weather calamities and terrorism events have less of an impact because we are used to them now.
There are infinite reasons a stock market could significantly change. They could base it on economic data, market sentiment, or geopolitical events. However, the difference between supply and demand will always be a factor. It’s like this, they base the market off the number of shares a specific business wants to sell and the number of shares an individual wants to buy. To entice the sellers, some individuals will increase their bid, and overall the market moves.
Selling Stock Too Fast
When a person buys into a stock, it is considered a long-term investment. If short-term, then it is volatile. Short-term traders have the intentions to make a quick profit, but there are dangers involved when selling too quickly.
Tax Rates
You definitely do not want to get caught up in selling your stocks too fast and watching the tax rate skyrocket. Stocks that are held onto for longer than a year can benefit for the capital gains tax rate. Capital gains rate is a lower form of the ordinary income tax rate. In 2018, the income tax bracket for traders was 37 percent, but with the capital gains tax, it was only 23.8 percent.
Transaction Costs and Commissions
If you decide to work with a traditional commission-based account, you will have to pay a commission fee every time you make a transaction. Even if you find a broker that does not charge much, selling too often can hinder your profits. For example, a commission fee of $100 is normal for a trade of $10,000, but if you sell your stock for quick cash, a $500 payout can cost you 20% of the trade.
Who Do You Turn To For Advice
Consider A Stock Analyst
A stock analyst is an individual who makes predictions about the stock market. They focus primarily on researching companies, analyze stocks based on market trends, and can make educated predictions. They will also prepare technical reports to help recommend a particular stock.
You can discuss this with your broker or stock analyst if you need help with finding one, if not, then depend on verified sites to guide you. Some of them will have an analyst ratings chart to get you started.
Brokers
When buying stocks it is normal to seek a broker to execute your trade. Sometimes, an individual will try to bypass a broker, but it is not easy. If you are someone who has a limited amount of funds, then that option exists.
However, having a broker comes is convenient. The idea of having a middleman might make you cringe, but by not using a stockbroker you can limit your options of buying different stocks. The broker plays a huge part in the range of investment products. And they have the potential to do more than just execute trades. They can connect you to advisors and keep your fees at a minimum.
The right broker can give you access to an unlimited amount of investable stocks and offer solutions with a wide range of tools.
Financial Advisor
Are you looking for someone who can help with your investments? Then maybe a financial advisor can help. They have the potential to manage your investments for a fee. Some can cost as much as $400 per hour. If that seems a bit much, then research internet blogs to see if they can offer any advice.
The more time you take to research, the better the results. Don’t do it all by yourself, there are plenty of people who are willing to help you get started. And remember to check out online sources if you get stuck. The more you know, the faster you can get trading and have that money work for you.
