Technical Analysis in Investing

Cohen Gil

Chapter 46 in Handbook of Investment Analysis, Portfolio Management, and Financial Derivatives:In 4 Volumes, 2024, pp 1525-1547 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Technical analysis helps investors to better time their entry and exit from financial asset positions. This methodology relies solely on past information of the prices and volumes of financial assets to predict the future price trend of a financial asset. Modern research has established that combined with other sentiment measures such as social media, it can outperform the standard buy and hold strategy. Moreover, it has been documented that novice and professional investors apply technical analysis in their investing strategy. An experienced investor should combine fundamental analysis and technical analysis for better trading results. Programmers use technical analysis to create algorithmic trading systems that learns and adopts to the changing trading environments and performs trading accordingly without human involvement. There are hundreds of technical tools offered by known trading platforms. Investors must use specific tools that fits his trading style and risk adoption. Moreover, different financial assets such as stocks, ETFs, cryptocurrency, futures, and commodities demand different set of tools. Furthermore, investors should use these tools according to the time frame they use for trading. This chapter will discuss different technical tools that are used to help traders of different time frames and different financial assets to achieve better returns over the traditional buy and hold strategy.

Keywords: Financial Accounting; Financial Auditing; Mutual Funds; Hedge Funds; Asset Pricing; Options; Portfolio Analysis; Risk Management; Investment Analysis; Momentum Analysis; Behavior Analysis; Futures; Index Futures; CDCs; Financial Econometrics; Statistics; Financial Derivatives; Financial Accounting (search for similar items in EconPapers)
JEL-codes: G1 G11 G12 G3 M41 M42 (search for similar items in EconPapers)
Date: 2024
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