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Subject:
What reputable research has been done to prove the value of Technical Analysis?
Category: Business and Money Asked by: wizzio-ga List Price: $25.00 |
Posted:
08 Feb 2005 10:49 PST
Expires: 10 Mar 2005 10:49 PST Question ID: 471181 |
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There is no answer at this time. |
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Subject:
Re: What reputable research has been done to prove the value of Technical Analysis?
From: omnivorous-ga on 08 Feb 2005 11:12 PST |
Wizzio -- It's what MBA students do for fun -- examine a variety of strategies to see if they work. I might suggest Burton G. Malkiel's "A Random Walk Down Wall Street." It has an extensive review of technical analysis. Best regards, Omnivorous-GA |
Subject:
Re: What reputable research has been done to prove the value of Technical Analys
From: martin_gale-ga on 08 Feb 2005 23:48 PST |
There is substantial evidence that technical analysis is of no use whatsoever. Most of the academic research in this area concerns something called the Efficient Market Hypothesis. There are three forms of this hypothesis, "weak", "semi-strong", and "strong". The weak form asserts that historical market data is of no use in predicting future prices. The semi-strong and strong form expand that to fundamental analysis and then to all information. I have written a few articles on this theme at http://www.efficientmarket.ca/ which is aimed at Canadian investors, but these articles are generally relevant: On why past performance is generally not an indication of future performance: http://www.efficientmarket.ca/article/Mutual-Fund-Performance On the efficient market hypothesis in relation to selling "bad" stocks: http://www.efficientmarket.ca/article/Buy-And-Hold Recently behavioral finance folks have challenged the Efficient Market Hypothesis and presented evidence that markets are not entirely efficient. They have demonstrated several "anomolies" in stock market pricing whereby an investor could obtain a higher than average return without taking a higher than average risk. These have approaches have much in common with technical analysis in that they, for example, arbitrage the top N versus the bottom N stocks by some metric. There is even evidence that some of these strategies work when trading costs and impact costs are taken into account. However, what is ordinarilly referred to as technical analysis is chart reading, bolinger bands, and such, and there is fairly strong evidence that none of these actually work. |
Subject:
Re: What reputable research has been done to prove the value of Technical Analysis?
From: omnivorous-ga on 09 Feb 2005 02:41 PST |
Wizzio -- MartinGale's done an excellent job of reviewing the status of research on "technical analysis." You may be interested in a Google Answer that sheds some additional light on "anomalies" in the efficient market theories: "Cross Section of Expected Stock Returns" http://answers.google.com/answers/threadview?id=273817 Best regards, Omnivorous-GA |
Subject:
Re: What reputable research has been done to prove the value of Technical Analysis?
From: traderjack-ga on 10 Feb 2005 03:15 PST |
There are free easy to read explanations of most common technical analysis methods over at <a href="http://www.traders101.com">www.traders101.com</a> - these explanations also give some indication as to how reliable the method is. Generally, most methods work 'some of the time'. No method works 'all the time' for obvious reasons. Note that you don't need a 'perfect' indicator to make money - even if it is 'right' less tha 50% of the time, you can still make money with it as long as you follow a rigorous money management strategy. |
Subject:
Re: What reputable research has been done to prove the value of Technical Analysis?
From: pfperry-ga on 09 Mar 2005 03:42 PST |
I have never seen (despite searching) any research supporting technical analysis, apart from the observation that some slight excess returns can be obtained from momentum trading at some times. If the complex strategies (Gann etc) had any validity, the experts would be making money using them, instead of asking $$$$ to teach newcomers (I mean, what would YOU do, if you found a 'working' system?). |
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