BC FINANCE
Saved by @curiousat3am

Nano Course On Python For Trading
==========================
Module 3

In this post, I will attempt to teach you how to write an algorithm in python to automatically find support and resistance. We shall use the data we downloaded in module 2.

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 To visualize price action, I have used the daily candlestick chart. To quantify the meaning of support and resistance, I have taken below definitions:
In a series of 5 continuous candles, if the first three candles make increasing high and then 2 decreasing highs, then the

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high of the third candle is considered resistance. Similarly, if the first 3 candles make lower lows and the next 2 make high lows then the low of the third candle is support.

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The above explanation is for the sake of quantifying support and resistance at a very basic level. These are called fractals. Now let's get started with the code.

mpl_finance is the new module here. We will use its candlestick_ohlc function.

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Now, if you remember, you downloaded data for nifty 50 stocks in module 2. We shall use that data. Let's work on ITC data this time.
We will use data from 1 Jan 2021 to 30 June 2021.

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Let's plot the candlestick chart for this data frame. We are going to use the candlestick_ohlc function from the mpl_finance module. I have defined a function plot_chart() which you can see in the google colab link in the last thread

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We will iterate over this dataframe and see if the low of the current candle is a support or high is a resistance. For that, we have created an array named levels.

Again remember the definition of fractals, we shall leave the first two candles and the last 2 candles as we

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need two candles to the right of a candle in order to consider it a fractal. Similarly, we will leave the last two candles. We will iterate over the data frame from index 2 till it is 2 less than its size. We also need to define two functions "isSupport" and "isResistance"
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determines and returns true/false if a candle low is a support or its high is resistance. In this image below 1-2-3-4-5 is a fractal as explained above, low of the candle on 10 Jan is support and high on 20 Jan is resistance. Repeating this process for the entire data frame.

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To plot the levels we add it in our plot function (named it plot_all() ) and execute it.

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But, alas it looks so ugly currently, I don't wanna look at it. There is a way that we can reduce the number of levels marked. What we will do that will first find the average length of a candle and reject all other price levels which are closed then twice this average

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let's find the average length of a candle i.e. average of high - low

s = 2 * np.mean(df['High'] - df['Low'])

Using this number, we will reject the current price level if there is already another price level within the range +- s. For this, we defined a function isFarFromLevel
Finally, we have reduced the number of price levels and the chart looks like below:

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If you want to work on the code and tinker with the code, go to Google Colab https://t.co/G8DuZvWO0g

I have shared the entire code on colab and added references for you to look into.

D: these won't help you become profitable but this will teach you how quant traders think &

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automate their day-to-day tasks and quantify certain ideas. If you have any doubt reach out to me in DM.

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In Module 4, we will learn about cloud computing and the use of cloud in trading. Until then, happy learning.

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தொல்லை இரும்பிறவிச் சூழும் தளை நீக்கி
அல்லல் அறுத்து ஆனந்தம் ஆக்கியதே – எல்லை
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திருவாசகம் என்னும் தேன்

பொருள்:
1.எப்போது ஆரம்பித்தது என அறியப்படமுடியாத தொலை காலமாக (தொல்லை)

2. இருந்து வரும் (இரும்)


3.பிறவிப் பயணத்திலே ஆழ்த்துகின்ற (பிறவி சூழும்)

4.அறியாமையாகிய இடரை (தளை)

5.அகற்றி (நீக்கி),

6.அதன் விளைவால் சுகதுக்கமெனும் துயரங்கள் விலக (அல்லல் அறுத்து),

7.முழுநிறைவாய்த் தன்னுளே இறைவனை உணர்த்துவதே (ஆனந்த மாக்கியதே),

8.பிறந்து இறக்கும் காலவெளிகளில் (எல்லை)

9.பிணைக்காமல் (மருவா)

10.காக்கும் மெய்யறிவினைத் தருகின்ற (நெறியளிக்கும்),

11.என் தலைவனான மாணிக்க வாசகரின் (வாதவூரெங்கோன்)

12.திருவாசகம் எனும் தேன் (திருவா சகமென்னுந் தேன்)

முதல்வரி: பிறவி என்பது முன்வினை விதையால் முளைப்பதோர் பெருமரம். அந்த ‘முன்வினை’ எங்கு ஆரம்பித்தது எனச் சொல்ல இயலாது. ஆனால் ‘அறியாமை’ ஒன்றே ஆசைக்கும்,, அச்சத்துக்கும் காரணம் என்பதால், அவையே வினைகளை விளைவிப்பன என்பதால், தொடர்ந்து வரும் பிறவிகளுக்கு, ‘அறியாமையே’ காரணம்

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