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Designing Stock Market Trading Systems: With and without soft computing by Tobias Hahn, Bruce Vanstone

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Chapter 4 – Technical Variables

“To predict the behaviour of ordinary people in advance, you only have to assume that they will always try to escape a disagreeable situation with the smallest possible expenditure of intelligence.”

Friedrich Nietzsche

4.1 Introduction

Unlike fundamental analysis, technical analysis does not focus on a firm’s ability to generate cash, to operate successfully in its environment or at the very least to survive until the next accounting period. Instead of dealing with the complex relationships between a firm and its business environment, analysts in this area only study its price behaviour.

The definition of technical analysis varies from author to author and is often understood to encompass not only price-related ...

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