I Found A New Great Trading Strategy with Python

Backtesting a trading strategy based on the PVI indicator on Microsoft stock and try to outperform the stock itself.

The Positive Volume Index is a cumulative indicator that uses volume change in an attempt to identify where💡smart money is active!

The PVI helps in assessing trend strength and potentially confirming price reversals and can be calculated for popular market indexes as well as used to analyze movements in individual securities.

Today I am exploring a strategy on Microsoft which uses the Positive Volume Indicator and as an addition the Relative Strength Indicator! The strategy is rather simple, but I enjoy how it illustrates that simple strategies may work well, and having a complex machine learning model is not necessarily needed to have success in the market. Let’s get into it!

“In the stock market, positive volume is the heartbeat of optimism, fuelling the rise of stocks and paving the way for success.” — Richard D. Wyckoff

The Positive Volume Index Formula:

• If today’s volume is greater than yesterday’s volume:
• Otherwise: