Effectiveness of Investment Strategies Based on Technical Indicators: Evidence from Vietnamese Stock Markets

Nguyen Thanh Cuong, Phan Huy Tam

Abstract


This paper, with a purpose to explore market inefficiencies, aims to investigating the effectiveness of investment strategies using 3 most popular technical indicators (MA, MACD, and RSI) taking into account market conditions, with and without trading costs and transaction fees. In order to test the performance of the technical analysis, secondary data were taken from 140 stocks listed on Ho Chi Minh stock exchange market for the investment period from 01/01/2009 to 01/01/2012. This study concluded that technical indicators could maximize returns during up-trend period and minimize the lost when the market declines. Using active strategy based on technical indicators - especially leading indicator like RSI - was recommended for active investors in up-trend market. With this approach, the study enhanced conclusions that could be applicable for both efficient and inefficient market conditions, which is suitable for a young and dynamic market like Vietnam.

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Copyright (c) 2018 Nguyen Thanh Cuong, Phan Huy Tam

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This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.