ABSTRACT
With the development of stock market analysis and the beginning of academic studies of stock prices’ behaviour, different trading rules have been offered to investors – when to buy and when to sell. For instance, one of the rules is based on the tracking of short-term and long-term moving average returns. Stocks should be bought when the short-term moving average return line crosses the long-term moving average ones. Another possible indicator for rule building is the estimation of the relation between average returns at different time intervals. In the paper by Park (2010) the decision indicator was based on the comparison of a 50-day-to-200-day moving average ratio. The author showed that periods over the 6-month holding earned a 1.45 percent per month return. Furthermore, Park’s moving average ratio strategy earns a profit also with 1 day, 5 days and 20 days in the formula for ratio calculating.
