Efficiency of Technical Analysis for the Stock Trading

Rommy Pramudya and Sakina Ichsani
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Rommy Pramudya: Faculty of Business and Management, Widyatama University, Bandung, Indonesia
Sakina Ichsani: Faculty of Business and Management, Widyatama University, Bandung, Indonesia

International Journal of Finance & Banking Studies, 2020, vol. 9, issue 1, 58-67

Abstract: The purpose of this study is to determine which indicators are more capable of showing more accurate sell and buy signals on the LQ45 index by using the oscillator indicator Moving Average Divergent Convergent (MACD), Bollinger Band, and Relative Strength Index (RSI). This research combines several indicators, whereas some previous studies use only one fator in their research so that there is no better visible difference and indicators.The results in this study indicate that the sell signal can be capturedwell by the Bollinger band and MACD indicators, but it cannot be captured properly by the RSI, the volume can be small or heading and are in the side ways, while the MACD plays a too slow role in capturing the signal buy compared to Bollinger bands and RSI. The use of a single indicator will never show a buy and sell signal that is really accurate, this is based on the results of research that shows the difference in timeliness in Bollinger, RSI and also MACD so that the combination of several types of indicators will be better compared to using single indicators. Although in statistics there are no significant differences, there are only differences in increment and improvement in the placement of existing values, but in this case, the order of this value is crucial for traders because it requires very high accuracy to determine the right decision in daily transactions.

Keywords: Oscillator indicator; MACD; Bollinger Band; RSI (search for similar items in EconPapers)
Date: 2020
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