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Do the technical indicators reward chartists? A study on the stock markets of China, Hong Kong and Taiwan


  • Wong, Wing-Keung
  • Du, Jun
  • Chong, Terence Tai-Leung


This paper studies the profitability of applying technical analysis that signals the entry and exit from the stock market in three Chinese stock markets - the Shanghai, Hong Kong and Taiwan Stock Exchanges. The Simple Moving Average (MA) and its extensions, Exponential MA, Dual MA, Triple MA, MACD and TRIX for both long and short strategies are examined. Applying the trading signals generated by the MA family to the Greater China markets, significantly positive returns are generated, which outperform the buy-and-hold strategy. The cumulative wealth obtained also surpasses that of the buy-and-hold strategy regardless of transaction costs. In addition, we study the performance of the MA family before and after the 1997 Asian Financial Crisis and find that the MA family works well in both sub-periods and in different market conditions of bull runs, bear markets and mixed markets. That technical analysis can forecast the directions of these markets implies that the three China stock markets are not efficient.

Suggested Citation

  • Wong, Wing-Keung & Du, Jun & Chong, Terence Tai-Leung, 2005. "Do the technical indicators reward chartists? A study on the stock markets of China, Hong Kong and Taiwan," Review of Applied Economics, Review of Applied Economics, vol. 1(2).
  • Handle: RePEc:ags:reapec:50272

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    References listed on IDEAS

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    Cited by:

    1. Zhu, Hong & Jiang, Zhi-Qiang & Li, Sai-Ping & Zhou, Wei-Xing, 2015. "Profitability of simple technical trading rules of Chinese stock exchange indexes," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 439(C), pages 75-84.
    2. Michael McAleer & John Suen & Wing Keung Wong, 2016. "Profiteering from the Dot-Com Bubble, Subprime Crisis and Asian Financial Crisis," The Japanese Economic Review, Japanese Economic Association, vol. 67(3), pages 257-279, September.
    3. Jing-Chao Chen & Yu Zhou & Xi Wang, 2017. "Profitability of simple stationary technical trading rules with high-frequency data of Chinese Index Futures," Papers 1710.07470,

    More about this item


    Technical analysis; Moving Average; buy-and-hold strategy; Financial Economics; G1; C0;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • C0 - Mathematical and Quantitative Methods - - General


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