Analysis of Short-term Entry and Exit Strategies Based on ADX and APO Indicators, and Long-term Holding Strategies for Various Household Investors: A Comparative Study

Abstract

This research delves into the different types of household investors, based on a comparison of short-term and long-term investment strategies. The study uses the ADX and APO indicators to simulate the active short-term trading strategy of the investment portfolio of ['AGG', 'GLD', 'SHY', 'SPY'] and SSE as the treatment group. Meanwhile, the long-term fixed holding strategy of 10 years from 2013 to 2022 and 5 years from 2018 to 2022 serves as the control group. The evaluation indicators include cumulative annualized return, standard deviation, Sharpe ratio, and Sortino ratio. The research discovered that for conservative investors, the active short-term trading strategy based on the ADX indicator may be more appropriate for them who have an investment portfolio of ['AGG', 'GLD', 'SHY', 'SPY']. At the same time, the active short-term trading strategy based on the APO indicator may be more suitable for those investing in the SSE. For household investors pursuing high returns, the long-term holding strategy may be more advantageous for investment portfolios of ['AGG', 'GLD', 'SHY', 'SPY'] and the SSE. And for those seeking a high benefit-risk ratio, the active short-term trading strategy may be more fitting. This research places emphasis on considering the risk tolerance of various investors, providing a reference for household investors to choose appropriate investment strategies for different investment targets. In terms of policy recommendations, household investors should select an investment strategy that suits their risk tolerance and investment goals by drawing comparisons with this research.