Comparison of the relative strength index with the moving average convergent and divergent technical analysis method in the basic metals group of the stock exchange

Dissertation for Master's Degree

Major: Accounting

Abstract:

Most people do not know properly about investment methods, they invest their financial resources and savings in different markets in order to get more profit and maximize their wealth. They are looking for less profit and without risk. For this reason, they invest the financial resources they have in banks and partnership bonds. Another group of people invests the resources they have in the markets in which they are working, and the other group in the markets of precious metals, foreign exchange and imported stocks, and they accept more risk and expect more benefits. In the meantime, technical analysis has attracted the attention of a large number of investors because it is widely used in most markets. The technical process of examining the volume of transactions, and taking into account past prices, to determine the future price of shares, currency, etc. is In fact, technical analysts, with the opinion that all factors are included in the price and the market usually repeats its behavior, predict the stock price in the future.

In this research, the risk return of two technical methods used by market participants, namely the relative strength index and the convergent and divergent moving average (triple), has been investigated. Securities that were accepted in the stock exchange until 1380 and the time period under review is from the beginning of 1380 to 9/13/1387.   In this format, two main hypotheses and eight sub-hypotheses have been discussed. In the hypotheses, the comparison of the return and risk of using the relative strength index and the converging average (triple) during the growth of the total index and the decrease of the total index separately, and in the two original hypotheses, the comparison of the risk and return of the two methods has been investigated at all times. And the result is that there is no significant difference between the two methods of relative strength index and convergent and divergent (triple) risk and return. The decrease and growth of the total stock market index did not cause a significant difference between the return and risk of the two methods. The method of this research is applied and descriptive, and its purpose is to help investors to choose the most appropriate method, and the t-test was used to test the equality of the average of two societies. style="direction: rtl;">Today, with the ever-increasing expansion of electronic commerce, it is possible to invest in markets around the world, and electronic transactions have become an important part of the mechanism of reliable global markets.

The discussed markets include not only stock markets, but also oil and non-ferrous metals markets, agricultural products markets, currency markets, etc.

Principles for making profit in this wide market Globally, the need for specialized and complex expert information seems to be necessary and essential.

Therefore, considering the extent of the global market, it seems very desirable to use tools that can achieve the most results with the least amount of information.

Many methods were invented by market participants to help investors to make the right decision to get better returns from their capital. One of the investment methods [1] that has been widely noticed by investors is the technical investment method. Inside the country, especially in recent years, many investors pay special attention to technical methods[2]. Technical analysts are called chartists[3]. Chartists try to use trends[4] and past stock prices to make decisions about capital. is placed, includes relative power index [5], convergent and divergent (triple) moving average [6]. The reason for choosing to compare these two indicators is their wide use by market participants. One of the problems that diverge from the convergent moving average is the delay in sending signals for buying and selling stocks.. Because in most cases, it sends a signal when the share price has gone through a large amount of its upward trend. To solve these problems, the converging moving average was invented. In this research, the triple converging and diverging average has been used. The converging and diverging average (triple) has attracted the attention of stock market investors in recent years because it sends buy and sell signals earlier than the converging average [7] and the converging average (double) [8]. and make a comparison to help investors and market participants in future decisions. style="direction: rtl;"> 

3-1 statement of the problem:

In general, there are various methods and techniques related to investing in the stock market, knowing the methods that are effective for today's investment can help investors to get what they want achieve maximum efficiency in order to increase wealth.  As a result, methods that can have the highest efficiency should be used.

In many financial books, three general points of view regarding stock price analysis have been mentioned. These include the fundamental method [1], the technical method and the modern portfolio theory method. Many traders believe that the combination of fundamental and technical opinions will be complementary in decision-making and create grounds for deepening decision-making. (Masah, 1387, pp. 27, 28)[2].

In the fundamental method, as can be guessed from the name of the method, the analyst examines the impact of all the factors that can affect the price of a share, including political issues, geography, the financial balance sheet of the company, the company's assets, the profit of the last few years, the state of the industry, the state of competitors, the power of management, and finally the intrinsic value [3] It calculates the share.

Many studies have been conducted in the domestic stock market to examine the efficiency of the Tehran Stock Exchange, which showed that the Iranian stock market has a weak efficiency. This has caused the difference between the stock price and its intrinsic price. Babaei, 1385, p.72) 4.

Analysts in the technical method, leaving all the above and accepting the philosophy that all the above have their effect on the price, only study the price trend.

One ??of the indicators of technical analysis is the relative strength index, which technical analysts use to measure the speed of price changes. The relative strength index shows the conditions of overbought (overbought) [4] and oversold (oversold) [5] and consequently the time of buying and selling to investors using the closing prices of stocks.

Another technical indicator that is examined in this thesis is the convergent and divergent moving average index (triple). In convergent and divergent moving averages, like the relative strength index, the closing prices of stocks are used. and the difference between two exponential averages [6] with a larger and smaller period (usually 26 and 12 days) and an exponential average which is usually 9 days is used as a signal line (Latfi and Darvish, 2015, p. 123) [7]. In this index, the difference between the two exponential averages and the signal line is the time of buying and selling shares. If the signal line crosses from the bottom to the top, it is the time to buy, and if it crosses the signal line from the top to the bottom, it is the time to sell.

Perhaps as a general definition, technical analysis can be considered as the study of market behavior using charts, with the aim of predicting the future of price trends. (John Murphy, book of technical analysis in markets Capital)

Actually, a technical analyst tries to predict the stock price by examining the price trend of a stock and identifying recurring patterns.