Technical Analysis & Efficient Market Hypothesis
INTRODUCTION -
TECHNICAL ANALYSIS
In finance, technical analysis is a security analysis discipline used for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the same tools of technical analysis, which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. The efficacy of both technical and analysis is disputed by efficient-market hypothesis which states that stock market prices are essentially unpredictable.
HISTORICAL VIEW
The principles of technical analysis are derived from hundreds of years of financial markets data. Some aspects of technical analysis began to appear in Joseph de la Vega 's accounts of the Dutch markets in the 17th century. In Asia, technical analysis is said to be a method developed by Homma Munehisa during early 18th century which evolved into the use of candlestick techniques, and is today a technical analysis charting tool. In the 1920s and 1930s Richard W. Schabacker published several books which continued the work of Charles Dow and William Peter Hamilton in their books Stock Market Theory and Practice and Technical Market Analysis. In 1948 Robert D. Edwards and John Magee published Technical Analysis of Stock Trends which is widely considered to be one of the seminal works of the discipline. It is exclusively concerned with trend analysis and chart patterns and remains in use to the present. As is obvious, early technical analysis was almost exclusively the analysis of charts, because the processing power of computers was not available for statistical analysis. Charles Dow reportedly originated a form of point and figure chart analysis.
Dow Theory is based on the collected writings of Dow Jones co-founder and editor Charles Dow, and inspired the use and development of modern technical analysis at the end of the 19th century. Other pioneers of analysis techniques include Ralph
TECHNICAL ANALYSIS
In finance, technical analysis is a security analysis discipline used for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the same tools of technical analysis, which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. The efficacy of both technical and analysis is disputed by efficient-market hypothesis which states that stock market prices are essentially unpredictable.
HISTORICAL VIEW
The principles of technical analysis are derived from hundreds of years of financial markets data. Some aspects of technical analysis began to appear in Joseph de la Vega 's accounts of the Dutch markets in the 17th century. In Asia, technical analysis is said to be a method developed by Homma Munehisa during early 18th century which evolved into the use of candlestick techniques, and is today a technical analysis charting tool. In the 1920s and 1930s Richard W. Schabacker published several books which continued the work of Charles Dow and William Peter Hamilton in their books Stock Market Theory and Practice and Technical Market Analysis. In 1948 Robert D. Edwards and John Magee published Technical Analysis of Stock Trends which is widely considered to be one of the seminal works of the discipline. It is exclusively concerned with trend analysis and chart patterns and remains in use to the present. As is obvious, early technical analysis was almost exclusively the analysis of charts, because the processing power of computers was not available for statistical analysis. Charles Dow reportedly originated a form of point and figure chart analysis.
Dow Theory is based on the collected writings of Dow Jones co-founder and editor Charles Dow, and inspired the use and development of modern technical analysis at the end of the 19th century. Other pioneers of analysis techniques include Ralph
Bibliography: [ 2 ]. Kirkpatrick and Dahlquist. Technical Analysis: The Complete Resource for Financial Market Technicians. Financial Times Press, 2006, page 3. ISBN 0-13-153113-1 [ 3 ] [ 4 ]. Murphy, John J. Technical Analysis of the Financial Markets. New York Institute of Finance, 1999, pp. 1-5, 24-31. ISBN 0-7352-0066-1 [ 5 ] [ 10 ]. Kirkpatrick and Dahlquist. Technical Analysis: The Complete Resource for Financial Market Technicians. Financial Times Press, 2006, page 3. ISBN 0-13-153113-1 [ 11 ] [ 16 ]. Eugene Fama, "Efficient Capital Markets: A Review of Theory and Empirical Work", The Journal of Finance, volume 25, issue 2 (May 1970), pp. 383-417. [ 17 ]. Kleinberg, Jon; Tardos, Eva (2005). Algorithm Design. Addison Wesley. ISBN 0-321-29535-8.