شناسایی از طریق تجزیه و تحلیل فنی: بررسی ترسیم نمودار و سرمایه گذاران غیر حرفه ای انگلستان

The usefulness of technical analysis, or charting, has been questioned because it flies in the face of the ‘random walk’ and tests present conflicting results. We examine chartists’ decision-making techniques and derive a taxonomy of charting strategies based on investors’ market ontologies and calculative strategies. This distinguishes between trend-seekers and pattern-seekers, and trading as a system or an art. We argue that interpretative activity plays a more important role than previously thought and suggest that charting’s main appeal for users lies in its power as a heuristic device regardless of its effectiveness at generating returns.

Only days after landing in my new job I’ve found myself praising such statements from investors as: ‘I was looking at the 10-day moving average last night and it is a perfect reverse duck tail and pheasant. Let’s bet the ranch.’ At this juncture my role was only to shout encouragement: ‘Yeah! Let’s do it.’ (Lewis, 1989, p. 192) In his entertaining account of life as a Salomon Brothers bond salesman, Michael Lewis finds himself bewildered by the investment practice of technical analysis, commonly known as ‘charting’. This is a method of identifying investment opportunities using graphs. Unlike fundamental analysis, charting requires no information other than price history; it is not necessary to know the activity – nor even the name – of the company whose shares are traded; nor the precise nature of the financial instrument in question; nor the uses and likely demand for a given commodity. Chartists are not necessarily schooled in the staples of fundamental analysis: economics, accounting, industry expertise and financial modelling. Instead, they use methods of varying complexity to extrapolate past price movements into future predictions. Many researchers share Lewis’ bewilderment when encountering charting; for finance researchers especially it flies in the face of the ‘random walk’ of stock movements and the theory of efficient markets (Malkiel, 2003). Moreover, it ignores the commonsense understanding that security prices should reflect the value of the underlying asset (Preda, 2007b). Despite this there is considerable evidence, offered mainly by finance researchers but also by sociologists, that charting is a popular strategy, even among professional traders (Menkhoff, 1997, Taylor and Allen, 1992 and Zaloom, 2003). The employment of its own language, as highlighted in the opening quote, separates charting from other types of analysis, providing status and legitimacy and identifying proponents as experts (Batchelor and Ramyar, 2006 and Lo et al., 2000). However, although there are numerous textbook summaries of charting methods (Batchelor & Ramyar, 2006), there is a striking absence of evidence on the way that charting is used ‘in the wild’, and thus little discussion of the calculative strategies and behaviour of individual chartists. This study proposes a conceptualisation of chartists through an inductive examination of how investors who use charting make investment decisions, the techniques that they use, and the way in which they make sense of the markets. We focus on non-professional (non-salaried) investors for several reasons. They are relatively under researched. They are free from the hierarchical controls that affect professional traders and from the networks built up between them, proximate or otherwise (Buenza and Stark, 2004, Knorr Cetina and Bruegger, 2000, Knorr Cetina and Bruegger, 2002 and Zaloom, 2006), because they are investing their own funds and often from their own homes. The result is that the observed decision-making process is less encumbered by exogenous factors. Moreover, recent studies have questioned the behaviour of non-professional (individual) investors, arguing that they are less sophisticated in comparison to professionals and that they process information differently (Allee et al., 2007 and Frederickson and Miller, 2004). It is suggested that, where individual investors are less-informed, they will be over-confident in their knowledge and trade too aggressively (Bloomfield et al., 1999). Following Mayall (2006) we define non-professional investors as individuals investing their own money in the stocks of companies through the financial markets; while some may depend on this for their livelihood, the force of ‘non-professional’ is to distinguish between these and those salaried investors employed by financial organisations. This article contributes to the growing Social Studies of Finance (SSF) research paradigm. It presents empirical evidence on the activities of non-professional investors that provides a valuable insight into their behaviour. A taxonomy is presented that identifies four types of charting strategy based on the market ontology of individual investors and their calculative autonomy. The taxonomy highlights a differing understanding of how the market is structured (ordered or otherwise) among individuals and different levels of reliance on the calculative activities of other market agents. In each category, the importance of individual interpretative activity and the variations in employment of methods is stressed. The implication for researchers here is twofold: some isolated tests of the efficacy of specific charting methods may lack validity in the real world, and also a concentration on the ability of charting methods to develop excess profits neglects the importance of these methods as heuristic devices located within the broader interpretative skills of their users. We do not claim that our findings, based on a limited group of interviewees, are representative of the universe of investors as a whole, but suggest a number of exploratory propositions that can be tested in future research.

In this article we have conducted an analysis of charting styles, and classified them into four groups depending on whether they were art or system based and whether they were seeking trends or patterns. We argue that the visualisation of a financial market is inexorably linked to, if not driven by, chartists’ views on market ontology and efficiency. Our taxonomy has shown how differences in seeing the market, driven by fundamental differences in chartists’ conception of what the market is, relate to varied calculative strategies. An investor who believes that markets are efficient has little need of this kind of graphic visualisation, and will simply buy a tracking fund. The purpose of charting appears to be the opposite, providing investors with visual illustrations of the structure of markets and showing the opportunities for profit amongst market chaos. A chartist, almost by definition, may not believe in efficient markets, whatever the evidence to the contrary; chartists who were less successful blamed themselves for deviation from their methods, and looked forward to making ‘big money one day’ (Chris). We did not interview, meet, or hear of, anyone who was an ex-chartist. Two major themes interlink to underpin the findings in this study. These themes are extremely important because they affect the validity of assumptions of some earlier research. The first is that the use of charting and the choice of charting style do not appear to be associated with financial returns. The second is the importance of interpretative and tacit skills in the activities of chartists. We have shown no clear relationship between charting style and individual investors’ returns and have suggested that returns may be dependent on individuals’ own interpretative skills. This presents problems for researchers attempting to determine the usefulness of charting, or its popularity with investors, on the basis of textbook methods. While the similarity between our interviewees’ accounts and textbook presentations of charting method shows that these are accepted as a basis for individual charting methods, it is clear that the strategies pursued by individuals may in fact be very different from those methods. We therefore suggest that attention could usefully be given to the way in which individuals develop their own interpretative strategies, and that it would be beneficial for some future research to focus on individual rather than generic charting strategies. There may also be implications for practitioners such as investors, company managers and market supervisors. In particular, practitioners should be aware of the popularity of charting as an investment method. Rather than dismissing it as irrational or speculative, it may help practitioners to understand that it is employed by relatively sophisticated investors, and appreciate that it may have its roots in attempts to manage and make sense of the market in a rational manner. Finally, we suggest that previous studies that aim to demonstrate or refute the efficacy of charting methods have only limited scope for developing our understanding of the popularity of charting among investors. This study has shown that the appeal of charting lies in the way that it allows investors to make sense of, manage, and participate in the markets. As an integrated discursive scheme, supplying a way of understanding financial markets and the tools to turn this understanding into investment practice, charting can be considered a performative technique in the sense of Callon, 1998 and Callon, 2007. This aspect of the appeal of charting is one which may be investigated most fruitfully by future research.