Moving average strategy using Python and yfinance api
Algo Trading, Python
Introduction of Moving Average
(MA) is a stock indicator that is commonly used in technical analysis. The reason for calculating the moving average of a stock is to help smooth out the price data by creating a constantly updated average price.
Let's dive in to find out how it can help us get more returns with a simple long-term investment.
Source : Investopedia
Let’s Start
We check a good momentum stock - PYPL
Step 1 — Get the data
# Import libraries and initialize our data parameters
We have considered the following parameters
Stock — Paypal
Initial Capital — $1000
Import Data from Yfinance
We now get the data in a DF, rename the columns, and also set an index to the date column.
Calculate the short moving average and long moving average
Get Amol Chawathe’s stories in your inbox
Join Medium for free to get updates from this writer.
Time to get the short moving average and long moving average, we use a simple crossover strategy to find the points where the short average is crossing the long average.
Finding the buy and sell signals
Let’s calculate the buying and selling signals and profit and loss .
We can check the results
Backtesting —
Let’s backtest the result with an initial capital of $1000
Let’s look at the result.
As you can see, we actually lose some gains when doing a moving average strategy. We hope to discuss more ideas and strategies which will enhance our potential to earn more income.
Graphs — Let’s plot some graphs
Let’s run the script
Result — we have a $2,799.78 profit based on Moving average strategy.
As we can see, there is a potential of generating more better income strategies. We tried to learn the basics here and get our results. Please find the attached link to my complete source code.
I help retail investors trade better, in case you are interested to learn about algo-trading or have any ideas to implement, please connect with me on telegram here t.me/anandnavathe
