Technical Analysis Report Research Paper

The Profitability of Technical Analysis: A Review

AgMAS Project Research Report No. 2004-04

106 PagesPosted: 15 Oct 2004  

Cheol-Ho Park

Chungbuk National University

Scott H. Irwin

University of Illinois at Urbana-Champaign - Department of Agricultural and Consumer Economics

Date Written: October 2004


The purpose of this report is to review the evidence on the profitability of technical analysis. The empirical literature is categorized into two groups, "early" and "modern" studies, according to the characteristics of testing procedures. Early studies indicated that technical trading strategies were profitable in foreign exchange markets and futures markets, but not in stock markets before the 1980s. Modern studies indicated that technical trading strategies consistently generated economic profits in a variety of speculative markets at least until the early 1990s. Among a total of 92 modern studies, 58 studies found positive results regarding technical trading strategies, while 24 studies obtained negative results. Ten studies indicated mixed results. Despite the positive evidence on the profitability of technical trading strategies, it appears that most empirical studies are subject to various problems in their testing procedures, e.g., data snooping, ex post selection of trading rules or search technologies, and difficulties in estimation of risk and transaction costs. Future research must address these deficiencies in testing in order to provide conclusive evidence on the profitability of technical trading strategies.

Keywords: technical analysis, market efficiency, trading systems, speculative markets

JEL Classification: G13, G14, G15

Suggested Citation:Suggested Citation

Park, Cheol-Ho and Irwin, Scott H., The Profitability of Technical Analysis: A Review (October 2004). AgMAS Project Research Report No. 2004-04. Available at SSRN: or

Download This Paper Open PDF in Browser



Several studies have been published in the last 55 years exploring technical analysis. However, there is a lack of research that consolidates the available knowledge concerning technical analysis. The main goal of this paper is, by classifying and coding published papers, to summarize and systematize the significant research that has contributed to the development of the field. Our paper contributes to the existing literature on technical analysis by presenting an overview of characteristics of the literature and potential knowledge gaps in this area, focusing on the analysis of stocks. The paper also discusses suggestions for future research in technical analysis.

Suggested Citation

  • Farias Nazário, Rodolfo Toríbio & e Silva, Jéssica Lima & Sobreiro, Vinicius Amorim & Kimura, Herbert, 2017. "A literature review of technical analysis on stock markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 66(C), pages 115-126.
  • Handle: RePEc:eee:quaeco:v:66:y:2017:i:c:p:115-126
    DOI: 10.1016/j.qref.2017.01.014

    • Farias Nazário, Rodolfo Toríbio
    • e Silva, Jéssica Lima
    • Sobreiro, Vinicius Amorim
    • Kimura, Herbert


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:quaeco:v:66:y:2017:i:c:p:115-126. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.


    Leave a Reply

    Your email address will not be published. Required fields are marked *