Stock Market Crash occurs when the prices of all the major stocks fall drastically low. The abrupt fall in prices will lead to major investors and traders as they hold the long position in these stocks. The main reasons of Stock Market Crash are economic imbalance, speculation and political events like war and crisis. In case of such situations and the case of stock market crash one should stay away from the market till the market recovers once again. Once the market recovers one can rely on the equity tips from the experts. Stock market crashes are the common phenomenon which occurs repetitively. A stock market crash is an event when the prices of most of the stocks in the exchange drop down by a large value. This is an event of catastrophic drop of the price value of the shares. The reasons of the stock market crash can be many like economic activity, speculation, psychology of investors and even political events. These reasons are discussed below.
The economic activity is an important factor which affects the ups and downs of the financial market. The economic slowdowns such as recessions can be a factor leading to stock market crash. Factors such as inflation also affect the stock market very severely. This may also lead to a stock market crash.
Trading in the stock market creates a lot of speculation. The speculation is an essential aspect of the stock market. The high speculation may sometimes act as a trigger for the stock market crash.