Ichimoku (fast): what it's actually best at

393 of 1,826 out-of-sample tests beat simply buying and holding the same asset — 21.5%. On the other 1,433 it did not. That is indistinguishable from the 20.1% rate across all 382 indicators we test (one pooled rate over all 660,005 tests we have run, not a mean of the per-indicator rates) — the difference is inside the margin this many tests can resolve, so read it as ordinary, not better or worse.

Each test is one asset on one timeframe: 1,826 of them, drawn from 898 assets across up to 4 timeframes. Not every asset has usable history on every timeframe, so that total is the grid we could actually run — it is not 898 × 4, and we do not pad it with tests we did not do. "Beat" means a higher return than holding that same asset over that same window. Measured out-of-sample — on data the setup was not chosen on.

Picking the single best timeframe for each asset after the fact raises it to 30.4% (273/898 assets). That number is the one worth distrusting: choosing the timeframe once you already know the answer is how backtests flatter themselves. Every indicator, ranked by this number

Ichimoku Kinko Hyo builds every line from midpoints of the high-low range rather than from closes. The conversion line is the midpoint of the last 9 periods' high and low; the base line is the same over 26. Leading Span A is the average of those two, and Leading Span B the 52-period midpoint — both drawn 26 periods AHEAD of price, and the shaded area between them is the cloud. A fifth line, the lagging span, is simply the close plotted 26 periods BEHIND. The forward and backward shifts are the point of the system: it is designed to be read at a glance across three time horizons simultaneously.

How it's read. Price above the cloud is read as an uptrend, below it a downtrend, and inside it as no trend. The cloud's thickness is read as the strength of the support or resistance ahead, and a cloud that changes colour — Span A crossing Span B — marks a projected shift. The conversion/base line cross is the nearest thing to a conventional entry signal.

Where it struggles by design. It is derived entirely from 9, 26 and 52-period midpoints, so like any average-based system it lags, and the cloud's forward projection is not a forecast — it is old data drawn in front of price. In a range the cloud is thin and price sits inside it for long stretches, which the system itself reads as 'no signal'. The conventional settings are usually explained by a six-day trading week that no longer exists, though that account is disputed — practitioners argue Hosoda arrived at the numbers through years of number theory rather than from the calendar.

Origin: Developed by Goichi Hosoda, a Japanese journalist writing as 'Ichimoku Sanjin', and published in 1969 after decades of work.