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INVESTING ON WORLD FINANCIAL MARKETS: CAN TECHNICAL ANALYSIS BE APPLIED?



S.N. Volodin
B.R. Binashev
volodinsn@yandex.ru
binash1995@gmail.com
senior lecturer, the Department of Finance, National Research University «Higher School of Economics», PhD in Economics
trainee, the Department of Finance, Directorate for Planning and Business Control, T2 Mobile
Moscow
Moscow

Keywords:

  • stock market
  • foreign exchange market
  • technical analysis
  • effectiveness of technical analysis
  • empirical assessment
  • currency pair
  • double moving average
  • raw material assets
  • oscillator
  • tested financial tools
  • Nowadays Russian investors have a possibility to trade on world stock, foreign exchange and commodity markets. Technical analysis isone of the most widely used methods. On the one hand, its tools and models are quite simple and easy to understand for most investors, which explains their popularity. On the other hand, private investors lacking experience in global trading operations often misjudge the effectiveness of the tools in question. To fill the gaps in financial science and in trading practice, we carry out an empirical research to test the methods of technical analysis on global financial markets. The results make us question the possibility of applying popular tools of technical analysis as key ones when developing investment strategy; they also reveal high risks intrinsic or the tools in question. The conclusions we make clearly demonstrate the general tendency of decreasing effectiveness of technical analysis, which proves previous research in this area. Apart from this, the empirical data enables us to carry out a comparative analysis of the results of applying technical indicators on various world markets, which has not been done before and thus represents the novelty of the research.