Technical Trading Systems as Crystal Balls in Reducing Risk: The Malaysian Stock Market

Heng, Fred Tham Kut; Azlinna, Azizan Noor; Lau, Wee‐Yeap

doi:10.3923/ibm.2012.140.146

Cited by 8 publications

(6 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This can be explained in that 1 or 2 days moving average was not appropriate to reflect the information in Malaysian stock market, regardless of the MCO stage. The results however concurred with the earlier findings by Lai et al (2007) and Heng, Azizan and Yeap (2012). Results from this study confirmed that the weak-form market efficiency hypothesis does not occur in Malaysian stock market for the reason that stock prices in Malaysian stock market tend to follow a trend and can be predicted through technical analysis.…”

Section: Discussionsupporting

confidence: 92%

Effectiveness of Moving Average Rules During COVID-19 Pandemic: Evidence from Malaysian Stock Market

2021

JEM

View full text Add to dashboard Cite

The COVID-19 outbreak significantly impacted the Malaysian stock market. To some extent, the Movement Control Order (MCO) implemented in the country affected the financial performance of listed companies. In consequence investors were quite uncertain of future movements of the stock market. Effective analysis techniques are thus required to study the market movements. Investors shall rely on signals emitted by technical indicators for their investment decisions making. The aim of this study is to examine the performance of the MA rules in Malaysian stock market during the different stages of the MCO. The sample used comprised 30 largest market capitalization stocks listed in the stock market. The period of study spanned 2 January 2020 to 30 August 2020. More than 50% of the buy signals emitted by (5,60,0.01) were found linked with positive returns in the next trading day during the MCO and CMCO sub-period respectively. Conversely, 41.28% and 34.78% of the sell signals emitted by (5,50,0.01) during the respective MCO and CMCO sub-period were linked with negative returns. Among all the MA rules, (5,60,0.01) generated the highest average return of 0.88% during the MCO and CMCO sub-period. Importantly, MA rules, (5,60,0.01) also generated positive returns during the out-ofsample period. The findings of this study shall contribute to the existing literature related to technical analysis. Besides that, the findings will benefit investors the most, inducing them to generate returns or avoid losses during the critical COVID-19 pandemic period. Investors are recommended to take the signals emitted by MA rules as alternative reference for their investments. Lastly, the relevant organizations should conduct more seminars to inform and enhance analytical skill of their clients, particularly retail investors.

show abstract

Section: Discussionsupporting

confidence: 92%

Effectiveness of Moving Average Rules During COVID-19 Pandemic: Evidence from Malaysian Stock Market

2021

JEM

View full text Add to dashboard Cite

show abstract

“…In the context of technical analysis, (2) revealed that Malaysian stock market owned greater forecasting power as compared to the other developed market, for instances Hong Kong and Japan. In Malaysia, previous studies such as (3,4) also found that the technical analy-sis able to generate profits in Malaysian stock market even after the inclusion of transaction costs. Regarding to the evidence of Malaysian stock market efficiency, earlier study of (11) found that Malaysian stock market is weak form efficient.…”

Section: Literature Reviewmentioning

confidence: 90%

“…Meanwhile, the lowest stock return before the earning announcement was -8.51% while the lowest stock return after the earning announcement was -8.79%. 1,3,5 The t-statistics that tests the hypothesis 1; 2,4,6 The t-statistics that tests the hypothesis 2. *significant at 1% level of significance **significant at 5% level of significance ***significant at 10% level of significance Table 3 reported the technical analysis returns around the earning announcements in financial year 2014.…”

Section: Methodsmentioning

confidence: 99%

“…In the other word, technical analysis studied how the market reacted in the past and predict the market movement in the future. For Malaysian stock market, number of studies found that technical analysis able to generate profits even after the inclusion of transaction costs (1)(2)(3)(4). Various corporate announcements could cause the market to react, and the most significant corporate announcement is the earnings announcement (1).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Effectiveness of Technical Analysis Signals Around the Earning Announcements in Malaysian Stock Market

Lee¹,

Jais²

2018

IJET

View full text Add to dashboard Cite

Technical analysis is an analysis that widely applied by the investor in the stock market. However, various corporate announcements could cause the market to react, and the most significant corporate announcement is the earnings announcement (1). Thus, this study examines the effectiveness of technical analysis signals around the earning announcements dates in Malaysian stock market. In doing so, this study applied and tested four technical indicators, namely Simple Moving Average (SMA), Relative Strength Index (RSI), Stochastic (K line), and Moving Average Convergence/Divergence (MACD) in Malaysian stock market. The sample of this study consisted of 30 largest capitalization companies from the main market of Kuala Lumpur Stock Exchange (KLSE). Meanwhile, the sample period covered from 2nd January 2014 to 31st March 2016. This study found that Moving Average Convergence/Divergence (MACD) significantly produced higher returns as compared to the other technical indicator before the earning announcement dates in financial year 2014 and 2015. The combined indicator of MA-MACD also found to have higher return in financial year 2015. The findings conclude that the technical analysis signals can be used to generate returns before earning announcement dates.

show abstract

“…More recently [ 38 ], showcased the dominance of neural networks incorporating the MA trading rule, surpassing other machine learning techniques in predictive accuracy. However [ 39 ], cautioned that positive returns for market participants employing technical trading rules may diminish when transaction costs are considered. Additionally [ 40 ], recommended the utilization of the MA trading rule for investors in less developed markets marked by informational inefficiencies, highlighting its potential advantages in such environments.…”

Section: Literature Reviewmentioning

confidence: 99%

Visualizing profitability: A heatmap approach to evaluate Bitcoin futures trading using VMA trading rules

Day,

Ni,

Hsu

et al. 2023

Heliyon

View full text Add to dashboard Cite

Technical Trading Systems as Crystal Balls in Reducing Risk: The Malaysian Stock Market

Cited by 8 publications

References 0 publications

Effectiveness of Moving Average Rules During COVID-19 Pandemic: Evidence from Malaysian Stock Market

Effectiveness of Moving Average Rules During COVID-19 Pandemic: Evidence from Malaysian Stock Market

Effectiveness of Technical Analysis Signals Around the Earning Announcements in Malaysian Stock Market

Visualizing profitability: A heatmap approach to evaluate Bitcoin futures trading using VMA trading rules

Contact Info

Product

Resources

About