Moving averages as a trend tracker for stock market investments

Abstract

The Brazilian stock exchange (B3) has become an alternative considered by many who were unaware of this form of investment since the fall in the basic interest rate (Selic) from 2017 to 2018. This demand channeled investors to look for more attractive yields. Allied to the interest of new investors, it was necessary to consider the tools available to minimize losses and maximize gains in the stock market. One of these tools is graphical analysis, which helps to identify trends in asset prices, to point out moments of purchase or sale. The objective of this article is to verify the effectiveness of the technical indicator of moving averages, as a simple and objective strategy, to simulate the purchase and sale in 2017 and the first half of 2018, of eighteen companies among those listed on B3, comparing with the Ibovespa index of this same period. The results showed that the average profitability of assets was 37.80% in long operations while the Ibovespa index obtained 13.77%. For short operations, an average return on assets of -16.59% was obtained, the Ibovespa index recorded -11.36%.