Is the amplitude of the swing good for the stock market?

According to Tejarat News, the range of price fluctuations has a significant impact on the process of capital market transactions. This domain can be considered a strong barrier against fertile emotional decisions.

The allowable range of fluctuations is the price range of the ceiling and the floor that each share can have in each working day. Also, the price can only move in this range. In fact, this range is the allowable range for stock price fluctuations.

Most experts believe that increasing the volatility range can have a positive effect on stock trading.

On the other hand, some experts say that the fluctuation range should be eliminated immediately, and this range has a negative impact on stock trading.

What effect does the fluctuation range have on stock trading?

Payam Elias Kurdi, a capital market expert on the range of fluctuations, says: Changing the range of fluctuations has two advantages. First, it increases market liquidity, and second, it balances the buying and selling ranks.

The capital market expert emphasizes: with a six percent change in the range of fluctuations, not much change occurs in the market. But the stock market liquidity is slowly increasing in a balanced way.

Eliaskordi explains the second advantage of the oscillation range: it deceives people’s buying and selling ranks. These queues caused some stocks to look good or some stocks to look bad.

Oscillation amplitude changes

The range of fluctuations in the last two years has gone through difficult days. For example, on February 16, 2017, this range changed from positive and negative five to positive and negative two. This change was taken at that time to balance the market; But experts say it had a negative impact on the trading process.

After that, the amplitude of the fluctuation increased from positive to positive six and negative three from the beginning of May last year. Finally, on May 25, 1400, the range of positive and negative fluctuations was set at five percent.

Promise to increase the amplitude of the swing

Majid Eshghi, the head of the Exchange Organization, said in his last press conference: “The scope of fluctuation is changing in the program of the Exchange Organization, but this issue needs to clarify some ambiguities, including the budget and political risks.”

I have already announced that domain reform will start with large companies, and now the plan is that from one date onwards, the reform will begin gradually and at a rate of one percent. This trend will be reviewed on a quarterly basis based on market feedback.

It seems that the situation of capital market transactions will change as the range of fluctuations increases. We are witnessing the arrival of new liquidity in the stock market and over-the-counter.

What is the range of stock market volatility?

The amplitude of fluctuation is a factor that has been defined on the share price since the beginning of the stock market and stock trading.

In stock markets, in order to prevent the confrontation of supply and demand, there are rules and regulations, such as the allowable range of fluctuations, stopping trading and other methods of such rules.

The permissible range of stock fluctuations is one of the important rules and principles in this market, which is intended to control stock price fluctuations and to reduce market turbulence and prevent shareholders’ emotional decisions. Each share in each trading day has an equal amount of allowable range of price and floor price fluctuations that it can have, and obviously the share price can fluctuate only in the defined range.

According to the trading regulations in Tehran Stock Exchange, the price fluctuation range is the lowest to the highest price at which the price can fluctuate during one or more official sessions of the stock exchange.