Exercise

Build an SMA-based signal strategy

It's time to build and backtest your first signal-based strategy. Although simple, these types of strategies can be effective, and also lay the groundwork for more complex strategies consisting of additional signals and information.

Implementing a price-comparison-based signal with bt is a straightforward process. You will first download some historical price data of the stock, calculate its SMA (simple moving average), implement an SMA-based signal strategy, and then backtest it with the stock price data.

The bt package has been imported for you. The historical price data of the Apple stock has been preloaded in price_data.

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Calculate the 20-day SMA of price_data.