How effective is technical analysis?

Investors can use technical analysis indicators in their strategies to get returns above the market level and turn market trends to their advantage to maximise profits. Intercapital Invest and ZF have tested several investment strategies using the simplest such indicator, namely the moving average, and results are surprising at first sight. A closer look, though, shows such a strategy has its limitations, as well. An investor that would have bought SIF Oltenia stock at the time of the listing (November 1st, 1999) and would have applied such a strategy would have theoretically stood to gain around 30,200%, according to ZF calculations. Against an initial investment of 1,000 RON, his or her portfolio would have been worth 302,000 RON on May 17th, 2010. However, such a strategy requires discipline from investors, so that they should not breach rules and sell or buy when graphs give them the respective signals.