7 top share trading factors to watch

When wanting to invest, many choose to invest in stocks and shares due to the potential return on investment they can provide. Stocks and shares have been popular for a long time, but they are not without their risk. If you invest in stocks or shares of a company, many factors can affect the price of them; both within and outside the company or group. If you’re confident in the board and happy with the earnings report, what else could go wrong? This is where trading factors come in. 

Trading factors are considered long term trends throughout the world and economy that can affect stocks and share prices; rather than what happens inside the company walls. External factors can and do rumble the economy on a consistent basis, having a knock on effect on corporate organizations. Take for example, the global pandemic. Covid 19 caused job losses and ceased trading, sometimes leading to company liquidations and some shock falls of corporate giants such as House of Fraser, Hertz, and Virgin Atlantic. 

Covid 19 has since become a trading theme, as it has had a long lasting effect on the global economy. By keeping an eye on trends and factors emerging around the world that could affect the market, we are less likely to be blindsided by external factors rocking share prices. 

Here are 7 share trading factors to watch below: 

Covid 19- Healthcare, leadership, and the ripple effects

The Covid-19 pandemic has brought about many changes in our world, especially in terms of the way that people interact with each other. This situation has allowed some companies to take the lead in societal transformation, by providing the best solutions to fight the virus (pharmaceutical, biopharma, and biotech sector), offering safe and reliable ways to shop (e-commerce and shipping companies), as well as to learn, to work, and to communicate remotely (technology, business communication, and work-from-home companies). However, as the world slowly returns to normal, these companies may struggle to adapt to a lesser demand if we beat the virus and reverse ourselves into our pre-pandemic habits at the workplace. If these companies then see a dip in their usage, or a drop in their cash flow, their stock prices could also fall. 

Technology

The technology sector has always been a promising sector to invest in.
 
5G and enhanced connectivity, artificial intelligence, machine learning, payments, cryptocurrency and blockchain, robotics, drones, and vehicle automation, as well as extended reality (XR), virtual reality (VR) and augmented reality (AR) are examples of technologies that are helping governments, companies, and individuals to stay connected and rely on a safe way to keep doing business and communicate. They’re also helping implement the digital transformation many companies need to thrive. With the rise of remote working and consumers spending more and more time online than face to face interactions; technology is one to watch.  

Interest Rates & Inflation

Central banks and governments around the world had to adopt drastic measures to help curb the spread of Covid 19 and its effects on their local economies. Interest rates were cut and governments adopted massive fiscal stimulus packages. However, now the world is starting to recover; many economies are trying to claw back the money lost during the pandemic- interest rates are rising, the housing market is at an all time high and inflation is climbing around the world. There will no doubt be continuous changes over the next few years to help support the flow of credit in the economy, stabilize financial markets, and assist economies to absorb the shock of Covid-19. 
 

Space exploration

The Space industry is continuing to prove it offers some of the most exciting trading opportunities currently. Space exploration is in the middle of a widespread transformation, with a growing industry opening up to young companies looking to participate in what they consider the social good.

With companies such as Voyager Space Holdings, Starlink, and SpaceX considering or planning to go public, as well as companies such as Virgin Galactic Holdings and Blue Origin organizing human space travel, the industry is primed for mass exposure.
 
It’s important to remember that there are different categories of space-related companies you can invest in, such as those helping in human spaceflight, those supporting national security, as well as those allowing and improving satellite communications, imagery, and data analysis.

Commodities

After two years of disruption, commodities such as gold have played its ‘safe haven’ role for quite some time. Covid-19 strongly impacted the commodities market by disrupting the supply chain and reducing demand, with travel restrictions and other measures adopted around the world to slow down the spread of coronavirus. 
 
Still, with many countries opening up for travel and tourism, the potential upcoming recovery might have a positive effect on many commodities, especially for the energy, power, and transport sectors, who have been hit hard. However, with political events always unfolding and oil and energy being the constant front of a power struggle, commodities can still be unpredictable going forward. 

You can trade commodities on ThinkMarkets, including previous metals and energy. Open a trading account today. 

Environmental

Sustainable businesses are emerging as one of the hottest investment opportunities, as investors are increasingly worried about environmental challenges. More and more share investors want to invest in companies that are not only looking to find solutions to fight climate change, but are implementing standards to take into account the environment and human well-being.
 
These investments, called ESG (Environmental, Social, and Governance), could be companies focusing on alternative energy, recycling, pollution control, clean water, sustainable construction materials, organic catering, carbon abatement, aquaculture, etc.
 
Cryptocurrencies

Whether you are already trading in cryptocurrencies or not, you’ve most certainly heard of bitcoin. The cryptocurrency market has become more volatile in its dips and spikes throughout the year, especially after the collapse of stable coin Luna. Nevertheless, cryptocurrencies, especially Bictoin, is increasingly popular among retail and institutional investors looking for ways to diversify their portfolio with a decentralized asset that is rather uncorrelated to traditional markets, not to mention continues to offer the chance of great returns. 
 
While it’s the first cryptocurrency to have been launched in 2009, there is more to cryptocurrency than bitcoin. Altcoins encompass all the other tokens, and may generate quite impressive returns (in addition to providing a solution to existing issues with bitcoin). Ethereum, dogecoin, polkadot, cardano, binance coin, litecoin, uniswap, and chainlink are among the most popular altcoins.

You can view a list of our cryptocurrency CFDs in our ThinkTrader app. As opposed to holding the physical asset, crypto CFDs allow you speculate on whether the price of the cryptocurrency will go up or down in price. 

Bottom Line

Taking investment factors into consideration is essential in online share trading, as share trading factors will influence your asset allocation and help you make more informed decisions. As the world starts to emerge out of a pandemic and adapt to a ‘new norm,’ many online share traders are therefore rebalancing their portfolios, looking for opportunities to boost returns with non-traditional assets such as cryptocurrencies, and trendy sectors such as space travel, the environment, fintech, as well as biotech and biopharma.

The most important thing to know when investing in stocks and shares is to always be active and aware of what's going on both within the company or group you are investing in, as well as the world around you. Make informed decisions by keeping up with our regular market commentary from our experts, and an eye on the market news. 

What factors are you following? Invest with us on our popular ThinkTrader app today.