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Selecting Stocks for Algorithmic Trading

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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?

Lower risk Signup and view all the answers

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

By iterating through each stock using functions in a loop Signup and view all the answers

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

To implement the SMA and MACD indicators Signup and view all the answers

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

download() Signup and view all the answers

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

2000-01-01 Signup and view all the answers

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

Both SMA and MACD Signup and view all the answers

What is the function used to calculate the SMA values?

sma() Signup and view all the answers

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

12 Signup and view all the answers

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

pandas_ta Signup and view all the answers

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

To identify potential crossovers Signup and view all the answers

What are the two conditions for the MACD value?

The MACD value should exceed the MACD signal and be greater than 0 Signup and view all the answers

How are the returns of the stock labeled?

As 0 and 1, with 0 indicating negative returns Signup and view all the answers

What analysis is conducted to determine the signal effectiveness?

Basic aggregation Signup and view all the answers

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

To select the best trading strategy Signup and view all the answers

What is the outcome of analyzing signal performance?

Initial insight into signal effectiveness and estimation of potential returns Signup and view all the answers