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.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
