ZF English

How effective is technical analysis?

18.05.2010, 21:06 7

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

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