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Introduction to Algorithmic Trading with Python

Frank Lee

1/20/2025

What is Algorithmic Trading?

Algorithmic trading uses computer programs to execute trades based on predefined rules. This guide will help you build your first trading system.

Prerequisites

  • Basic Python knowledge
  • Understanding of financial markets
  • Access to market data

    • Your First Strategy

    ```python

    def simple_moving_average(prices, window=20):

    return sum(prices[-window:]) / window

    def generate_signal(prices):

    sma_short = simple_moving_average(prices, 10)

    sma_long = simple_moving_average(prices, 50)

    if sma_short > sma_long:

    return "BUY"

    else:

    return "SELL"

    ```

    Backtesting

    Always test your strategy on historical data before risking real money.

    Risk Management

  • Never risk more than 2% per trade
  • Use stop losses
  • Diversify across strategies

    • Conclusion

    Start small, learn continuously, and always prioritize risk management.

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