The Economic Viability of Some Commonly used technical Analysis Tools in the Malaysian Securities market

Abstract

Analysing stock market information using computer is no more the domain of sophisticated investors and investment analysts of established brokerage firms. In the present sophisticated technological era, a variety of technical analysis software is available to investors at reasonable cost. Software such as AIQ, SuperCharts, Metastock and many others are available to help investors convert the available information into technical indicators or signals in a variety of forms (such as charts, graphs, bar charts etc.) to guide them in their investment decisions. There must be some economic rationale for investors to invest in these 100s to help them make investment decisions or is it just a vogue in the securities industry to use sophisticated measures to show one’s prudence? The economic rationale or viability can only be justified if the tools do guide investors to make profitable decisions that are better than those eared on a market portfolio proxied by the KLSE Composite Index (KLSE CI). This paper presents some evidence on the economic viability of some technical tools commonly used repetition by investors in the Malaysian securities market.