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Efficiency of Technical Analysis for the Stock Trading

Author

Listed:
  • Rommy Pramudya

    (Faculty of Business and Management, Widyatama University, Bandung, Indonesia)

  • Sakina Ichsani

    (Faculty of Business and Management, Widyatama University, Bandung, Indonesia)

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.

Suggested Citation

  • Rommy Pramudya & Sakina Ichsani, 2020. "Efficiency of Technical Analysis for the Stock Trading," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(1), pages 58-67, January.
    • Handle: RePEc:rbs:ijfbss:v:9:y:2020:i:1:p:58-67
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    References listed on IDEAS

    as
    1. Ansari Saleh Ahmar, 2017. "Sutte Indicator: A Technical Indicator in Stock Market," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 223-226.
    2. Ivanovski, Zoran & Ivanovska, Nadica & Narasanov, Zoran, 2017. "Technical Analysis Accuracy At Macedonian Stock Exchange," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 8(2), pages 105-118.
    Full references (including those not matched with items on IDEAS)

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