What effect does changing the fluctuation range have on the stock market?
According to Tejarat News, the director of stock exchange supervision of the Stock Exchange and Securities Organization announced that the range of fluctuations will change from Monday.
Mehdi Parchini explains in this regard: one percent is to be added symmetrically to the range of fluctuations of the first stock market and the over-the-counter market. Trading in this market will be done with a volatility range of six percent, but the secondary market will be trading with a volatility range of five percent.
“Increasing the volatility in the long run can have a positive effect on the stock market,” Mohammad Khabarizad, a capital market expert, told TradeNews. In previous years, the range of fluctuations was defined so that the stock market would not be excited. This oscillation range was probably necessary at that time.
He explains: “As the number of investors has multiplied, the stock market has gained its own popularity.” It seems that it needs to align itself with world standards.
Khabarizad continues: Iran’s capital market differs from global stock exchanges in terms of volatility and volume. In my opinion, the second option that the organization should pursue is the issue of removing the base volume. They are currently looking for volatility and are gradually increasing in order not to shock the market.
This capital market expert concludes: This gradual increase in the range of fluctuations is in the interest of the market. This domain change will probably be applied in other stock and OTC markets for one to two weeks.
“Increasing the amplitude of the fluctuation increases the analytical power of the market,” he says. When the volatility of the range remains in the range, the excitement of the queues increases, which has a negative impact on the market.
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.