Smart Investor Malaysia

What Causes Bursa Malaysia Prices To Go Up And Down?


We all know that investing in stocks are considered to be “high risk high return” investment. Which means that it can potentially make you profit a lot, and make you lose a lot as well. With that in mind, what causes the Bursa Malaysia prices to be volatile with the price going up and down almost all the time?

It all boils down to the concept of supply and demand. When there are more buyers than sellers, naturally the price will go up. When there are more sellers than buyers, then naturally the price will go down.

Bursa Malaysia Prices Always Go Up And Down

To understand further, you need to do some Technical Analysis. Look at the charts and follow the trend.

If a stock is in a solid uptrend, you stand to make good money for as long as the trend is still bullish. Well as long as there are new buyers and the volume is strong, then there’s still potential for it to go up.

But in the end, what goes up must come down right?

You can also look at stocks that are moving downtrend and wait for a strong reversal signal. As the seller weakens with no new sellers, then buyers will start to turn the tide. Once buyers are more than sellers, the price should stop from going down any further and the momentum will start to change upwards.

Once it hits rock bottom, surely there’s no other way it can go other than up?

More Millennials Coming Into The Stock Market

Another reason why Bursa Malaysia prices are seeing a lot of volatility is due to many new investors come flooding the market – more specifically the youngsters. They typically trade stocks that are in the news, trending or based on thematic investment such as healthcare-related or oil-related stocks while also generally favoring small-cap and mid-cap stocks.

With better access to information and technology, millennials are most prepared to participate in online share trading and investment. Investment gains and validation of good analysis attract young investors to develop money-managing skills and later, to begin their own investing journey. 

Millennials are also deeply passionate about global issues that are important to them, and these include Environmental, Social and Governance (ESG), green technology and clean technology.

Know The Risks Involved

All investments carry with them some degree of risk, and these risks can range from inflation and interest rate changes to political uncertainties and economic trends. An investor must know his own risk tolerance, investment time horizon, and most importantly, his own financial goals. Holding investments for the long term, too, is advisable.

Trading on stocks that have no fundamental earnings, poor cash flow and poor business model is a dangerous start. Penny stocks and cheaply priced warrants, too, can also turn into potential big losses as their price drops can be very sharp too.

New investors should consider only value stocks and business models that are sustainable and should always make a practice of verifying if the information received is accurate. It is always good to diversify. Monitor the market and keep some cash ready for new opportunities that might arise.

Make sure you read 4 Mistakes People Make In Stock Investing.

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