Algo Trading can be much easier than you think. Below all the coding is using Pine script and based on the Tradingview platform. The article will first display the full version of the strategy content and then explain it more specifically.
Background Introduction
The Buffett indicator is named after Mr. Warren Buffett, the CEO of Berkshire Hathaway. It is the entire stock market capitalization divided by gross domestic product (GDP). Warren Buffett argues that if the number is too high, it means companies aren’t producing enough to be worth their valuations on the stock market.
The indicator can help investors assess the level of the overall market situation, especially in a bull market. When stocks overall are trading significantly below GDP, it indicates a buy signal. On the other hand, when stocks are collectively trading above GDP, it is a sell signal. Moreover, when stocks cross above GDP, it tends to be a sign that a correction is possible.
Below is the full version code:
//@version = 4
study("Yaonology Buffett Index", overlay=false)
SPX = security('TVC:SPX', "D", close)
GDP = security('FRED:GDP', "D", close)
B_index = SPX/GDP
plot(B_index, color = color.blue)
Step One: Initialization
//@version = 4
study(“Yaonology Buffett Index Tutorial“, overlay=false)
“study” is different from “strategy”. It contains calculations and may plot information on charts, but cannot be used in backtesting.
Yaonology defines the name as “Yaonology BUffet Index” ;
overlay: Yes – True; No – False
Step Two: Input
Part 1:
SPX = security(‘TVC:SPX’, “D”, close)
GDP = security(‘FRED:GDP’, “D”, close)
security- the function that enables to extract data from the symbol
“D”-we set the interval as each day
“close”- we use the closing price
Part 2: Calculate the index
B_index = SPX/GDP
Step Three: Plot
plot(B_index, color = color.blue)-color for the index is set as blue
Complete Version
![[ Beginner 1 ] Best Algo Trading Tutorial - Buffett Index](https://yaonology.com/wp-content/uploads/2020/04/Buffett-Index-1024x558.png "[ Beginner 1 ] Best Algo Trading Tutorial - Buffett Index")
#Algorithmtradingstrategy #Algorithm #codingtutorial #buffettindicator #buffett #economicindex
