| Q 1. | Candlestick chart can be created using the data of _____ .
high-prices
low-prices
open and closing prices
All of the above
 CORRECT ANSWER  WRONG ANSWER
CORRECT ANSWER:All of the above Explanation:
A candlestick displays the open, high, low, and closing prices in a format similar to a modern-day bar-chart, but in a manner that extenuates the relationship between the opening and closing prices. |
| Q 2. | Which of these is not considered in technical analysis?
Candlesticks
P/E Ratio
Volume
MACD
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:P/E Ratio Explanation:
Price Earnings (P/E) Ratio as a measure is a very popular method of fundamental analysis. It consists of finding a company whose P/E ratio is low compared to others of its kind. |
| Q 3. | The closing prices (in Rs.) of Cloud9 Ltd. is as under. Calculate the Simple Moving Average.
1 Jan - 26,
1 Feb - 28.50,
1 March - 31.25,
1 April - 29,
1 May - 27.50,
1 June - 26.
27.16
28.04
27.88
29.30
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:28.04 Explanation:
A simple moving average is formed by computing the average (mean) price of a security over a specifi ed number of periods.
It is calculated by adding the closing prices and dividing the total by number of periods - here it is 6 (months)
1 Jan - 26,
1 Feb - 28.50,
1 March - 31.25,
1 April - 29,
1 May - 27.50,
1 June - 26.
Total = 168.25
Divided by 6 = 28.04 |
| Q 4. | Which technique involves shorting stocks after rapid moves upwards ?
Scalping
Swing
Fading
Daily pivots
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Fading Explanation:
Fading involves shorting stocks after rapid moves upwards.
The fading strategy is based on three assumptions: i) the stock is overbought, ii) early buyers are ready to begin taking profits and iii) existing buyers may be scared out. Although risky, this strategy can be extremely rewarding. |
| Q 5. | A higher open on next trading day of hammer indicates that ______ .
bulls have taken control
there is no possibility of trend reversal
bears are intact
None of the above
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:bulls have taken control |
| Q 6. | What is a losing streak of five or more than five losses in a row called ?
Draw down
Pull down
Pushback
Pullback
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Draw down Explanation:
A trader should always put Stop Loss and trade a fraction of his capital. It is very important for the trader to have sound knowledge in the area concerned and should be comfortable with the trading system. He should be aware that it is possible and inevitable to have a losing streak of five losses in a row. This is called drawdown. |
| Q 7. | Fundamental analysts consider the market to be 20% psychological and 80% logical - State True or False ?
True
False
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:True Explanation:
Fundamental analysts consider the market to be 20% psychological and 80% logical.
Technical analysis works on Pareto principle. It considers the market to be 80% psychological and 20% logical. |
| Q 8. | Exponential moving average (or exponentially weighted moving average) is calculated by giving _____ weight to recent prices relative to older prices.
Equal
More
Less
None of the above
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:More Explanation:
Exponential moving average is a type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. This is also known as “exponentially weighted moving average”. |
| Q 9. | Under Dow Theory, reversal from bull market to bear market or vice versa is not signaled until and unless both indexes i.e. Industrial Index and Transportation Index. Confirm the same.
True
False
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:True Explanation:
Under Dow Theory, a reversal from a bull market to bear market or vice versa is not signaled until and unless both indexes i.e. Industrial Index and Transportation Index confirm the same.
In simple words, if one index is confirming a new primary uptrend but another index remains in a primary downtrend, then there is no clear trend.
Basically Dow Theory says that stock market will rise if business conditions are good and stock market would decline if business conditions are poor. |
| Q 10. | _______ is/are assumption under Technical Analysis.
Prices generally move in trends
History tends to repeat itself
Prices follow the random walk theory
Both 1 and 2
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Both 1 and 2 Explanation:
The field of technical analysis is based on three assumptions:
1. The market discounts everything.
2. Price moves in trends.
3. History tends to repeat itself.
The Random Walk theory suggests that changes in stock prices have the same distribution and are independent of each other, therefore, the past movement or trend of a stock price or market cannot be used to predict its future movement |