Book chapter
Technical Analysis in the Foreign Exchange Market
Handbook of Exchange Rates, pp.343-373
Wiley handbooks in financial engineering and econometrics, John Wiley & Sons
2012
DOI: 10.1002/9781118445785.ch12
Abstract
Summary
Technical analysis is the use of past price behavior and/or other market data, such as volume, to guide trading decisions in asset markets. These decisions are often generated by applying simple rules to historical price data. A technical trading rule (TTR), for example, might suggest buying a currency if its price has risen more than 1% from its value 5 days earlier. This chapter introduces the technical methods, and then discusses how and why academic researchers have investigated these methods in the foreign exchange market. It then describes what economists have learned about technical analysis. The chapter concludes by discussing promising avenues of future research. Several potentially complementary hypotheses have been put forward to explain the apparent success of technical analysis. There are at least three ways—data snooping, publication bias, and data mining—in which the apparent returns could be spurious, an artifact of the research process.
Details
- Title: Subtitle
- Technical Analysis in the Foreign Exchange Market
- Creators
- Christopher J Neely - Federal Reserve Bank of St. LouisPaul A Weller - University of Iowa
- Contributors
- Jessica James (Editor)Ian W Marsh (Editor) - Cass Business School, London, UKLucio Sarno (Editor) - CEPR, UK
- Resource Type
- Book chapter
- Publication Details
- Handbook of Exchange Rates, pp.343-373
- Series
- Wiley handbooks in financial engineering and econometrics
- DOI
- 10.1002/9781118445785.ch12
- Publisher
- John Wiley & Sons; Hoboken, New Jersey
- Number of pages
- 31
- Language
- English
- Date published
- 2012
- Academic Unit
- Finance
- Record Identifier
- 9984963150802771
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