Selecting Stocks for Algorithmic Trading

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Questions and Answers

What is the primary reason for focusing on stocks with similar characteristics when developing an algorithm?

  • To analyze only one stock at a time
  • To use a different library for each stock
  • To increase risk by investing in small-cap or mid-cap companies
  • To ensure comparable fundamentals and technical aspects (correct)

What is the Nifty 50 index composed of?

  • 50 leading companies in India (correct)
  • 100 leading companies in India
  • All publicly traded stocks in India
  • 20 leading companies in India

What is the purpose of the yfinance library in the analysis?

  • To extract historical stock prices (correct)
  • To implement the SMA and MACD indicators
  • To install other required libraries
  • To build the trading algorithm

What is the advantage of using the Nifty 50 index compared to small-cap or mid-cap companies?

<p>Lower risk (B)</p> Signup and view all the answers

How can the analysis method outlined for WIPRO be applied to other stocks?

<p>By iterating through each stock using functions in a loop (D)</p> Signup and view all the answers

What is the purpose of the pandas_ta library in the analysis?

<p>To implement the SMA and MACD indicators (A)</p> Signup and view all the answers

What is the function used to extract the historical price of a stock?

<p>download() (A)</p> Signup and view all the answers

What is the start date used in the example for extracting historical stock prices?

<p>2000-01-01 (A)</p> Signup and view all the answers

Which technical indicator is used to identify crossovers as trade signals?

<p>Both SMA and MACD (C)</p> Signup and view all the answers

What is the function used to calculate the SMA values?

<p>sma() (C)</p> Signup and view all the answers

What is the fast parameter set to in the MACD calculation?

<p>12 (D)</p> Signup and view all the answers

What library is used to calculate the MACD and SMA values?

<p>pandas_ta (A)</p> Signup and view all the answers

What is the primary purpose of encoding SMA and MACD values?

<p>To identify potential crossovers (B)</p> Signup and view all the answers

What are the two conditions for the MACD value?

<p>The MACD value should exceed the MACD signal and be greater than 0 (D)</p> Signup and view all the answers

How are the returns of the stock labeled?

<p>As 0 and 1, with 0 indicating negative returns (D)</p> Signup and view all the answers

What analysis is conducted to determine the signal effectiveness?

<p>Basic aggregation (D)</p> Signup and view all the answers

What is the purpose of calculating the 5-day and 10-day returns of the stock?

<p>To select the best trading strategy (B)</p> Signup and view all the answers

What is the outcome of analyzing signal performance?

<p>Initial insight into signal effectiveness and estimation of potential returns (B)</p> Signup and view all the answers

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