DataCamp
Course Outline

Code your own indicator - I

100xp

In R, indicators are functions. So far, you've used indicators that have been completely pre-written for you and have only used the add.indicator() function. In this exercise, you will write and apply your own indicator. Don't worry, it'll be fairly straightforward!

The function you will create will calculate the average of two different RSI indicators. Specifically, you will create an RSI of 3.5, the average between RSI 3 and RSI 4. The function will work as follows:

  • Take in a price series;
  • Calculate RSI 3;
  • Calculate RSI 4;
  • Return the average of RSI 3 and RSI 4.

This RSI can be thought of as an RSI 3.5, in that it's longer than an RSI 3 and shorter than an RSI 4. By averaging, this indicator takes into account the impact of four days ago while still being faster than a simple RSI 4. Averaging in this way can also remove the noise of both RSI 3 and RSI 4.

In this exercsise, you will create a function for this indicator (RSI_avg()) and add it to your strategy (strategy.st).

Instructions

  • Create and name a function: RSI_avg. The three arguments for your function will be price, n1, and n2.
  • Compute an RSI of lookback n1, named rsi_1.
  • Compute an RSI of lookback n2 named rsi_2.
  • Calculate the average of rsi_1 and rsi_2, call this RSI_avg.
  • Set the column name of RSI_avg to RSI_avg using colnames(), and return RSI_avg.
  • Add this indicator to your strategy using inputs of n1 = 3 and n2 = 4. Label this indicator RSI_3_4.
    Take Hint (-30xp)