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Quantifying the Volatility of Stock Price Changes in the Indian Market Using the Moving Average Envelope and Bollinger Bands.
- Source :
- Institutions & Economies; Apr2024, Vol. 16 Issue 2, p30-56, 26p
- Publication Year :
- 2024
-
Abstract
- A trading system in any stock market is built on long-term, intermediate-term, and short-term indicators. Some 'lagging' indicators, such as the simple and exponential moving averages, can be used to determine the direction of a medium- to long-term trend. Some 'leading' oscillators, on the other hand, can tell a trader whether or not a trend is losing momentum. This paper examines how well moving average envelopes and Bollinger Bands measure stock price volatility, and how useful these technical analysis tools are for short-term horizons. The paper then attempts to evaluate the speed of these indicators in order to explain the sensitivity and response time of data collected from a secondary survey in the Indian capital market. The article concludes that moving average envelopes outperform Bollinger Bands in real trading settings, since technical trading rules are generally designed for short-term investments. Bollinger Bands can detect abrupt price fluctuations, however they are not more effective than moving average envelopes to measure profitability. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 22321640
- Volume :
- 16
- Issue :
- 2
- Database :
- Complementary Index
- Journal :
- Institutions & Economies
- Publication Type :
- Academic Journal
- Accession number :
- 176671487
- Full Text :
- https://doi.org/10.22452/IJIE.vol16no2.2