Importance of technical and fundamental analysis in the European foreign exchange market

Oberlechner, Thomas

doi:10.1002/ijfe.145

Cited by 136 publications

(89 citation statements)

References 21 publications

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“…When the Deutsche Bundesbank conducted a survey of the same group of companies, all except one partici-pated (Arnswald, 2001). Other surveys on financial matters that cannot rely on the authority of a central bank -and which are thus better comparable with our approach -have realized response rates such as 45% (Shiller and Pound, 1989, for institutional investors), 54% for foreign exchange dealers in Europe (Oberlechner, 2001) or 8% regarding foreign exchange dealers in the US (Cheung and Chinn, 2001). …”

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confidence: 98%

The use of trading strategies by fund managers: some first survey evidence

Menkhoff¹,

Schmidt²

2005

Applied Economics

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Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. (Hirshleifer, 2001, Barberis and Thaler, 2003, van der Saar, 2004. This motivates the demand for fresh information on fund managers' actions. Terms of use: Documents in EconStor mayWe focus here on trading strategies as it has become obvious that the simplified notion of perfectly rational behaviour and the derived buy-&-hold strategy reflect only part of the fund managers' world. The efficient market paradigm has been challenged by findings that momentum and contrarian strategies which neglect any fundamental information can be profitable, even after consideration of risk premiums. We do not know, however: how important are these trading strategies for fund managers? In which way are they applied and do users share common characteristics? Finally, does real-world application indicate rational behaviour? This study for the first time provides survey evidence on these questions, complementing and extending studies based on transactions data. It finds that all of these strategies are typically used in a complementary manner. In the same instance, the users of momentum, contrarian and buy-&-hold strategies tend to be characterised by specific attributes. It appears that the implementation of all of these strategies -as revealed by the questionnaire evidence -may be difficult to reconcile with efficient markets.Recent empirical research has lent considerable credibility to trading strategies We find that most fund managers rely on all three strategies to some degree, indicating that proponents of certain exclusive trading strategies are rare. However, most professionals have clear preferences regarding these strategies, which can be 1 Note that the evidence on other trading "strategies", such as relying on so-called head-andshoulder rules, may be less favourable (e.g. Lucke, 2003). 2 The fact of lacking satisfactory performance applies to German funds as well (Kempf and Griese, 2003). 4 related to personal characteristics, information sources and behavioural patterns. 3 We find these determinants of trading strategies in univariate and multivariate ap-proaches. It appears from our data that all three predetermined trading strategies The remainder of the paper is structured as follows: Section 2 presents the hypotheses to be tested by the questionnaire and Section 3 describes the data from the questionnaire. Results on the use of trading strategies are presented in Section 4, and Section 5 covers information on attributes and beliefs of the users of certain strategies. Section 6 conc...

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confidence: 98%

The use of trading strategies by fund managers: some first survey evidence

Menkhoff¹,

Schmidt²

2005

Applied Economics

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“…That chartism is extensively used in currency trade has also been con…rmed by Menkho¤ (1997), who conducted a survey in August 1992 on the German market, by Lui and Mole (1998), who conducted a survey in February 1995 on the Hong Kong market, by Oberlechner (2001), who conducted a survey in the spring 1996 on the markets in Frankfurt, London, Vienna and Zurich, and by Cheung and Chinn (2001), who conducted a survey between October 1996 and November 1997 on the U.S. market. A general observation in these surveys is that a skew towards reliance on technical, as opposed to fundamental, analysis at shorter time horizons was found, which became gradually reversed as the length of the horizon considered was increased.…”

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confidence: 85%

Chartism and exchange rate volatility

Bask

2007

Int. J Fin Econ

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The purpose of this paper is to implement theoretically, the observation that the relative importance of fundamental versus technical analysis in the foreign exchange market depends on the time horizon in currency trade. For shorter time horizons, more weight is placed on technical analysis, while more weight is placed on fundamental analysis for longer horizons. The theoretical framework is the Dornbusch (1976) overshooting model, where moving averages is the technical trading technique used by the chartists. The perfect foresight path near long-run equilibrium is derived, and it is shown that the magnitude of exchange rate overshooting is larger than in the Dornbusch (1976) model. Specifically, the extent of overshooting depends inversely on the time horizon in currency trade. How changes in the model's structural parameters endogenously affect this time horizon and the magnitude of exchange rate overshooting along the perfect foresight path are also derived. JEL Classification: F31, F41

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“…Faktor dan kondisi diamati di pasar yang berbeda dari orang-orang fundamentalis. Oberlechner (2001) mengenai analisis teknis ada 59% dari pedagang menggunakan chartist atau analisis teknis. Analisis teknis lebih populer digunakan investor, sebagian besar dari mereka menggunakan hanya data harga dan volume karena mudah, cepat diperoleh, disimpan dan dimanfaatkan.…”

Section: Pendahuluanunclassified

Pengaruh Total Asset Turn Over, Return on Asset Dan Return on Equity Terhadap Accumulation Distribution Line

Haningsih

Zulkifli

Doktoralina

2017

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Abstract:Fundamental and technical analysis is used by analysis to predict the trend of stock price and trading volume. Studies conducted aimed to determine the effect of fundamental analysis to technical analysis. Combining two forms of analysis can produce a more accurate prediction of the stock price movement of listed cement companies in Indonesia Stock Exchange. Research experts indicate that the fundamental and technical analysis can be used independently with the ability to predict stock price movements. This study combines both analysis in a model that can provide a more robust predictive capability in the Company's share price movements of cement. Fundamental analysis is the economy wide scope, one of the predictions of financial performance. In this study the total asset turnover, return on assets and return on equity to determine which stocks are pretty good. While technical analysis is used accumulation distribution line that has a better ability to predict future stock prices because the data contained technical stock price and trading volume to determine when to buy and sell momentum. These results indicate that the total asset turnover, return on assets and return on equity significantly influence the accumulation distribution line. While the individual that the return on equity has no significant effect. The results of this study are expected to improve knowledge for the readers, especially investors in order to obtain optimal benefits. Keywords: Total Asset Turn Over, Return on Asset, Return on Equity and Accumulation Distribution LineAbstrak: Analisis fundamental dan teknikal digunakan oleh para analis untuk memperkirakan tren harga dan volume perdagangan saham. Studi yang dilakukan bertujuan untuk mengetahui pengaruh analisis fundamental terhadap analisa teknikal. Apakah dengan menggabungkan kedua bentuk analisis ini dapat menghasilkan sebuah prediksi yang lebih tepat terhadap pergerakan harga saham Perusahaan semen yang terdaftar di Bursa Efek Indonesia. Hasil riset para ahli menunjukkan bahwa analisis fundamental maupun teknikal dapat digunakan secara terpisah yang memiliki kemampuan untuk memperkirakan pergerakan harga saham. Penelitian ini menggabungkan kedua analisis dalam sebuah model sehingga dapat memberikan kemampuan prediksi yang lebih kuat pada pergerakan harga saham Perusahaan semen. Analisa fundamental adalah ruang lingkup ekonomi secara luas, salah satunya prediksi kinerja keuangan. Dalam penelitian ini digunakan total asset turn over, return on asset dan return on equity untuk menentukan saham mana yang cukup baik. Sedangkan Analisis teknikal yang digunakan accumulation distribution line yang memiliki kemampuan lebih baik dalam memperkirakan harga saham kedepannya karena data teknikal terdapat harga dan volume perdagangan saham untuk menentukan momentum kapan membeli dan menjual. Hasil penelitian ini menunjukan bahwa total asset turn

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Importance of technical and fundamental analysis in the European foreign exchange market

Cited by 136 publications

References 21 publications

The use of trading strategies by fund managers: some first survey evidence

The use of trading strategies by fund managers: some first survey evidence

Chartism and exchange rate volatility

Pengaruh Total Asset Turn Over, Return on Asset Dan Return on Equity Terhadap Accumulation Distribution Line

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