engleski

TSA – A Computer Program for Technical Analysis of Stocks

Technical analysis is based on the widely accepted premise that security prices are determined by the supply and the demand for securities. With adequate tools technical analysis is recording historical financial data on charts, i.e. bar charts and line charts, studying these charts in an effort to find meaningful patterns, and using these patterns to predict future prices. To analyze the pros and cons of technical analysis in this article an educational computer program called TSA is presented, which calculates on the basis of daily high, low and close prices of stocks or other securities bar charts and line charts of stocks. Taking into account different moving averages (50, 100 and 200 days) and actual daily stock prices of 30 stocks in the DJIA the program is graphing the trades and simulates the results of such trades. It calculates the number of profitable and unprofitable trades, the average trading profit or loss, the maximum trading profit or loss and at the end the net profit if it exists. The goal of such an approach for students is to simulate different investment strategies without the risk of loosing real money and therefore being better prepared for real life investments in the mature financial markets and in the more volatile emerging financial markets.

stocks ; technical analysis ; supply ; demand ; prices ; computer program ; investment strategies

Indexed/abstracted in: SCOPUS