Profitability of Ichimoku-Based Trading Rule in Vietnam Stock Market in the Context of the COVID-19 Outbreak

Abstract:

Ichimoku Kinkohyo or Ichimoku Cloud Chart is one of the most popular technical indicators used by traders all over the world. However, its profitability is heavily influenced by the market environment, to which it is applied. Furthermore, the COVID-19 outbreak may have an impact on the market environment as well as the performance of all technical indicators. This study is the first to look into the profitability of Ichimoku-based trading rules in the Vietnamese stock market in the context of the COVID-19 outbreak. More particularly, the COVID-19 outbreak has a positive influence on the performance of this strategy when considering the entire market as well as a variety of industries including real estate industry, food and beverage industry, resource industry, and automotive and electronic components industry. Compared to the pre-pandemic period, the return on investment obtained per each transaction using the Ichimoku-based strategy increased by roughly in the pandemic period. Compared to the Buy-and-hold method, the Ichimoku-based strategy could slightly increase Accumulated return while posing a lower risk. The findings indicate that the Ichimoku-based strategy is applicable to the Vietnam stock market, regardless of the adverse effects of the pandemic on the industries.