| Summary: | The research is aimed at testing a technical analysis using some indicators
to decide on the buy and sell decision at stock market in Indonesia. The scope of
the research is on testing a single indicator in comparison with testing three
indicators in simultan. When the indicator brings the buy signal on, then buying
activity will be executed at the open price on the next market day. Vice versa,
when the indicator brings the sell signal on, then selling activity will be executed
at the open price on the next market day.
The research focuses on ten stocks, five of them are registered at LQ-45
index, while the remaining five at PEFINDO-25. The data then was tested against
three time periods: a six-month period, starting on 21
st
June 2012 until 21
st
December 2012, a one-year period, starting on 21
st
December 2011 until 21
st
December 2012, and a two-year period, starting on 21
st
December 2010 until 21
st
December 2012. The goal is to check whether the indicator runs well in several
time periods or instead provide a good result in a certain period.
After running the test and analysing the result, it is concluded that using
three indicators will bring a better result than using a single indicator, especially
in a long period of trading. Using three indicators will reduce the frequency of
trading compared to using a single indicator. Eventhough the trading frequency is
reduced, using three indicators will not guarantee that the frequency percentage of
winning trade will increase subsequently. In some instances, using a single
indicator has a high percentage frequency of winning trade. The use of technical
analysis can bring a better result on the test using stocks of PEFINDO-25 than
those of LQ-45. Price volatility of stocks with low asset, such as in PEFINDO25,
will be detected early when technical analysis is in use, is the reason why the
test resulted in such a case. Using a technical analysis does not always guarantee
that it will bring profit in anytime, and therefore, portfolio management is
essential. In this thesis, the writer used five stocks in his portfolio to avoid any
risk when market is unfavorable for trading using technical analysis. The research
also reveals that a survey concluding 90% of trader will incur loss or even face a
bankruptcy can be avoided. It also suggests that stocks trading using only
technical analysis can yield a lucrative profit. This requires a trader to be
discipline in executing the buy and sell signals arising from a technical analysis.
Besides, a trader must manage a stock portfolio that consists of at least five
stocks.
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