TY  - JOUR
AU  - Coe, Thomas S. 
AU  - Laosethakul, Kittipong 
PY  - 2010
TI  - Should Individual Investors Use Technical Trading Rules to Attempt to Beat the Market?
JF  - American Journal of Economics and Business Administration
VL  - 2
IS  - 3
DO  - 10.3844/ajebasp.2010.201.209
UR  - https://thescipub.com/abstract/ajebasp.2010.201.209
AB  - Problem statement: Despite widespread academic acceptance of the Efficient Markets Hypothesis, some stock traders still use technical trading rules in an attempt to beat the market. Approach: This study looked at four trading rules, namely, the arithmetic moving average, the relative strength index, a stochastic oscillator and its moving average.  These trading rules compare the relationship of current prices to past price patterns to generate a signal when to buy and sell stocks. The trading rules were tested over the years 2000-2009, a period of time that exhibited bull and bear markets, to determine if traders could actively trade a stock and beat a passive investment strategy. Results: We tested the four trading rules against the 576 stocks that comprise the S&P 100, the NASDAQ 100 and the S&P Midcap 400.  The results proved discouraging to that strategy, in that no one trading rule consistently beat the market. Conclusion/Recommendations: Since technical trading rules cannot be used to consistently beat a long-term buy and hold strategy, we recommend that investors first use fundamental analysis to select stocks and then apply a technical trading rule to enhance potential trading gains.