International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 2, pp: (1076-1087), Month: October 2019 - March 2020, Available at: www.researchpublish.com
A STUDY ON FORECASTING OF SECURITY PRICES USING RELATIVE STRENGTH INDEX (RSI) SELECTED COMPANIES IN INDIA H.Navitha Rani Lecturer, Pragati Mahavidyalaya Junior, Degree & P.G.College, Hanuman Tekdi, Koti, Hyderabad-500 001 E-Mail Id: navithabhatnagar123@gmail.com Mobile No. 9494229111
Abstract: Security analysis is the analysis of traceable financial instruments called securities. These can be classified into debt securities, equities, or some hybrid of the two. More broadly, futures contracts and traceable credit derivatives are sometimes included. Security analysis is typically divided into fundamental analysis, which relies upon the examination of fundamental business factors such as financial statements, and technical analysis, which focuses upon price trends and momentum. Quantitative analysis may use indicators from both areas. Investment in stock market is common scenario for making capital gains. One of the major concerns of today’s investor’s is regarding choosing the right securities for investment, because selection of inappropriate securities may lead to losses being suffered by the investor. In order to reduce the risk of incurring losses and increase the return many tools are available, of which RSI is a powerful analytical tool which will help the investor choose the right combination of securities for their portfolio construction thus reducing the risk and increasing the return. The relative strength index (RSI) is one of the best known widely used technical analysis indicators. The study is aim to empirically test the functioning of RSI in its classic form asset of data and to reconfigure the indicator by also taking in to account of the trading volume in its calculation formula. After adjusting the RSI with the trade volume the study will test a set of data. The study intended to analyze whether higher yields can be obtained by using RSI compared to those which result from applying the buy and hold the strategy. Keywords: Relative Strength Index, Fundamental Analysis, Technical Analysis, Moving Average.
1. INTRODUCTION 1.1Technical analysis the relative strength index was first introduced by Welles Wilder in an article in the commodities magazine in June 1978. The calculations and analysis of RSI has been provided in this book with new concepts in technical trading systems. The RSI is a price following momentum indicator that moves between 0 and 100. It measures the strength of share by monitoring and the changes in the closing prices. Technical analysis is a method of predicting price movements and future market trends by studying charts of past market action. Technical analysis is concerned with what has actually happened in the market, rather than what should happen and takes into account the price of instruments and the volume of trading, and creates charts from that data to use as the primary tool. One major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously.
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