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Python Algorithmic Trading Cookbook

You're reading from  Python Algorithmic Trading Cookbook

Product type Book
Published in Aug 2020
Publisher Packt
ISBN-13 9781838989354
Pages 542 pages
Edition 1st Edition
Languages
Author (1):
Pushpak Dagade Pushpak Dagade
Profile icon Pushpak Dagade

Table of Contents (16) Chapters

Preface Handling and Manipulating Date, Time, and Time Series Data Stock Markets - Primer on Trading Fetching Financial Data Computing Candlesticks and Historical Data Computing and Plotting Technical Indicators Placing Regular Orders on the Exchange Placing Bracket and Cover Orders on the Exchange Algorithmic Trading Strategies - Coding Step by Step Algorithmic Trading - Backtesting Algorithmic Trading - Paper Trading Algorithmic Trading - Real Trading Other Books You May Enjoy Appendix I
Appendix II
Appendix III

Trend indicators – moving average convergence divergence

Moving average convergence divergence (MACD) is a lagging trend indicator. MACD has three components: the MACD line, MACD signal, and MACD histogram. The MACD line helps in identifying trend changes as it signals the start of a new trend direction. Large positive values of the MACD line indicate that the shorter EMA is much larger than the longer EMA. This suggests that there is an overbought condition in the market, which means prices will be going up. Similarly, large negative values of the MACD line indicate that the shorter EMA is much smaller than the longer EMA. This suggests that there is an oversold condition in the market, which means the prices will be going down. When the MACD line crosses above the MACD signal and is positive, a buy signal is generated; and the MACD line crosses below the MACD signal and becomes negative, a sell signal is generated.

The formulae for computing the three components of MACD are given...

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