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Technical Analysis as a Rational Tool of Decision Making for Professional Traders

Author

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  • Elżbieta Kubińska
  • Marcin Czupryna
  • Łukasz Markiewicz
  • Jan Czekaj

Abstract

The psychological background of technical analysis usage is investigated to further explain the popularity and common usage of technical analysis as an investment decision tool. Attitudes toward technical analysis of professional futures market traders and neophyte investors, represented by finance students, were examined. Technical analysis is one of the most popular methods supporting investment decisions and it is much more popular among future market traders than among neophyte investors. The concept of processing information was used to explain this phenomenon. Neophyte investors are more experiential and intuition-driven while using technical analysis models, while futures market traders are more rationally driven. Technical analysis methods help professional traders on futures markets, which are less transparent than regulated stock markets, to process information; those methods are perceived by them as rational, cognitive tools supporting their decision making.

Suggested Citation

  • Elżbieta Kubińska & Marcin Czupryna & Łukasz Markiewicz & Jan Czekaj, 2016. "Technical Analysis as a Rational Tool of Decision Making for Professional Traders," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(12), pages 2756-2771, December.
    • Handle: RePEc:mes:emfitr:v:52:y:2016:i:12:p:2756-2771
    DOI: 10.1080/1540496X.2016.1217004
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    Cited by:

    1. Christoph Huber & Christian König-Kersting & Matteo M. Marini, 2022. "Experimenting with Financial Professionals," Working Papers 2022-07, Faculty of Economics and Statistics, Universität Innsbruck, revised Jun 2024.
    2. Rafał Wolski & Monika Bolek & Jerzy Gajdka & Janusz Brzeszczyński & Ali M. Kutan, 2023. "Do investment fund managers behave rationally in the light of central bank communication? Survey evidence from Poland," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 15(5), pages 757-794, February.
    3. Jin, Xiaoye, 2022. "Performance of intraday technical trading in China’s gold market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 76(C).

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