Implementing Stochastic RSI Indicator in Backtrader

Stochastic RSI is a popular indicator used in technical analysis to determine overbought and oversold conditions in the market. It is a combination of two indicators — the Relative Strength Index (RSI) and the Stochastic Oscillator. The RSI is a momentum indicator that measures the strength of a security’s price action and the Stochastic Oscillator is a momentum indicator that compares a security’s closing price to its price range over a set period of time.

In this article, we will show you how to implement the Stochastic RSI in Backtrader, an open-source algorithmic trading library.

Step 1: Importing the Required Libraries

The first step is to import the required libraries. In this case, we will import the Backtrader library and the numpy library. The numpy library is used for mathematical operations.

import backtrader as bt
import numpy as np

Step 2: Define the Stochastic RSI Indicator

Next, we will define the Stochastic RSI indicator in a class. This class will inherit from the Backtrader Indicator class. In the init function, we will initialize the RSI and Stochastic Oscillator indicators.

class StochasticRSI(bt.Indicator):
    lines = ('stochrsi',)
    params = (
        ('period', 14)…