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A Study on Using Both, Technical and Fundamental Analysis Together for Trading and Investing, with Reference to Day Trading Stocks & Options

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A Study on Using Both, Technical and Fundamental Analysis Together for Trading and Investing, with Reference to Day Trading Stocks & Options A study on using both, technical and fundamental analysis together for trading and investing, with reference to Day Trading Stocks & Options Dissertation submitted in part fulfilment of the requirements for the degree of MSc in Management Practice at Dublin Business School A study on using both, technical and fundamental analysis together for trading and investing, with reference to Day Trading Stocks & Options Ameya Sunil Pawar (10385647) MSc in Management Practice January, 2019 DECLARATION I, AMEYA SUNIL PAWAR, declare that this research is my original work and that it has never been presented to any institution or university for the award of Degree or Diploma. In addition, I have referenced correctly all literature and sources used in this work and this this work is fully compliant with the Dublin Business School’s academic honesty policy. Signed: Ameya Pawar Date: 07 January, 2019 ABSTRACT There have always been clashes between the fundamentalists and the chartists about how the stocks and markets should be analyzed. Chartist or technical analysts are those who forecast the markets by considering the historic trends, whereas the fundamental analysts consider all the other factors that affects the stocks. Most people prefer analyzing the markets based on technical or fundamental analysis, while there are only a few who make the use of both, fundamental and technical analysis together for analyzing the stocks. Even when you search the internet for fundamental and technical analysis, the search returns with major results for the substituting nature of two, denoting the better of two. On the other side, there have been huge research done on the complementary nature of the two, proving that even if a single analysis works well in isolations, the results of complementary behavior returns with larger gains. Despite of proofs in regressions and cases and all other ways possible, investors resist to change the way of single kind of analysis based on the type of trade. This research focuses on knowing what kind of analysis is done by the traders and investors, who are members of the Facebook group “Day Trading Stocks and Options”, and the reason for that particular analysis. This is done with a view to find reason why people rarely use the complementing nature of technical and fundamental analysis, both together. Table of Contents 1. INTRODUCTION ................................................................................................................................ 9 1.1. Context ............................................................................................................................................... 9 1.2. Aims and Objectives ........................................................................................................................ 10 1.3. Research Questions .......................................................................................................................... 11 1.4. Justification for Proposed Research ................................................................................................. 12 1.5. Time, Cost and Project Management ............................................................................................... 13 1.6. Roadmap .......................................................................................................................................... 14 1.7. Scope and Limitations ...................................................................................................................... 15 1.8. Contribution ..................................................................................................................................... 17 2. LITERATURE REVIEW ................................................................................................................... 19 2.1. Introduction ...................................................................................................................................... 19 2.2. Technical Analysis ........................................................................................................................... 19 2.3. Fundamental Analysis ...................................................................................................................... 22 2.4. Substituting nature ........................................................................................................................... 25 2.5. Complementing nature ..................................................................................................................... 27 2.6. Conclusion ....................................................................................................................................... 29 3. RESEARCH METHODOLOGY ........................................................................................................ 31 3.1. Introduction and research onion ....................................................................................................... 31 3.2. Research Philosophy layer: Positivism ............................................................................................ 34 3.3 Research approach Layer: Deductive ............................................................................................... 38 3.4. Research Strategy Layer – Web-Based Survey ............................................................................... 41 3.5. Research choice layer: Mono-Method quantitative research ........................................................... 45 3.6. Time Horizon: Cross sectional ......................................................................................................... 47 3.7. Research Population ......................................................................................................................... 48 3.8. Data Collection: Google Forms ....................................................................................................... 49 3.9. Survey Design .................................................................................................................................. 50 3.10. Data analysis: Tableau ................................................................................................................... 51 3.11. Pilot test ......................................................................................................................................... 51 3.12. Ethical issues .................................................................................................................................. 52 3.13. Limitations of methodology ........................................................................................................... 54 3.14. Conclusion ..................................................................................................................................... 57 4. DATA ANALYSIS/ FINDINGS ........................................................................................................ 58 4.1. Introduction ..................................................................................................................................... 58 4.2. Survey Distribution and Response ................................................................................................... 58 4.3. Data Analysis .................................................................................................................................... 59 4.3.1. Consent form ............................................................................................................................ 59 4.3.2. General information .................................................................................................................. 60 4.3.3. Market factors influencing Investment Decisions .................................................................... 67 4.3.3.1. Technical Analysis .................................................................................................................. 71 4.3.3.2. Fundamental analysis ............................................................................................................ 78 4.3.3.3. Both ........................................................................................................................................ 85 5. DISCUSSION ..................................................................................................................................... 89 5.1. Introduction ..................................................................................................................................... 89 5.2. Sub Question 1 ................................................................................................................................. 89 5.3. Sub Question 2 ................................................................................................................................. 94 5.4. Sub Question 3 ................................................................................................................................. 98 3.5. Sub Question 4 ............................................................................................................................... 100 6. CONCLUSIONS/ RECOMMENDATIONS .................................................................................... 104 6.1. Introduction ................................................................................................................................... 104 6.2. Research Question ........................................................................................................................
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