Visualize an indicator and guess its purpose - I
Now you will visualize these indicators to understand why you might want to use the indicator and what it may represent. Recall that a trend indicator attempts to predict whether a price will continue in its current direction, whereas a reversion indicator attempts to predict whether an increasing price will soon decrease, or the opposite.
In this exercise, you will revisit the 200-day SMA. As a refresher, this indicator attempts to smooth out prices, but comes with a tradeoff - a lag. You will plot the prices of SPY and plot a 200-day SMA on top of the price series. Using this information, you will determine if it is a trend indicator or reversion indicator.
The quantmod and TTR packages and price series SPY have been loaded into your workspace.
Deze oefening maakt deel uit van de cursus
Financial Trading in R
Oefeninstructies
- Plot the closing prices of
SPY. - Overlay a 200-day SMA of the closing prices using the
lines()function and color it red. - Is the 200-day SMA a trend or a reversion indicator? Print your answer as either
"trend"or"reversion"in the console.
Praktische interactieve oefening
Probeer deze oefening eens door deze voorbeeldcode in te vullen.
# Plot the closing prices of SPY
___(___(___))
# Overlay a 200-day SMA
lines(___(___(___), n = ___), col = ___)
# What kind of indicator?
___