What Makes Technical Analysis Popular?

Abstract

See, stats, and : https : / / www . researchgate . net / publication / 281788209 What ? Article DOI : 10 . 15678 / AOC . 2015 . 1205 CITATIONS 0 READS 51 3 : Some : Discounting – one ? View Marcin Cracow 9 SEE Elżbieta Cracow 24 SEE Łukasz Kozminski 19 SEE All . The . All - text and , letting . ARGUMENTA OECONOMICA CRACOVIENSIA No 12 • 2015 ISSN 1642 - 168X AOC , 2015 ; 12 : 53 – 66 Abstract According to the Efficient Market Hypothesis , investors cannot achieve above - - average returns by using technical analysis tools . This paper attempts to answer the question as to what makes technical analysis popular , regardless of the efficiency of capital markets . The objective is to verify whether investors have certain cognitive inclinations that make them more likely to believe in the efficiency of technical analysis models . We postulate a positive relationship between different forms of overconfidence and faith in the effectiveness of technical analysis methods . This relationship was confirmed only in the case of the " better than average " effect . The two other examined forms of overconfidence , namely , overprecision and illusion of control , did not yield statistically significant results . However , the lack of confirmation by all three forms of overconfidence is in line with the results presented in the literature , namely , that there are no significant relationships between different forms of overconfidence .