Book Image

Python Algorithmic Trading Cookbook

By : Pushpak Dagade
Book Image

Python Algorithmic Trading Cookbook

By: Pushpak Dagade

Overview of this book

If you want to find out how you can build a solid foundation in algorithmic trading using Python, this cookbook is here to help. Starting by setting up the Python environment for trading and connectivity with brokers, you’ll then learn the important aspects of financial markets. As you progress, you’ll learn to fetch financial instruments, query and calculate various types of candles and historical data, and finally, compute and plot technical indicators. Next, you’ll learn how to place various types of orders, such as regular, bracket, and cover orders, and understand their state transitions. Later chapters will cover backtesting, paper trading, and finally real trading for the algorithmic strategies that you've created. You’ll even understand how to automate trading and find the right strategy for making effective decisions that would otherwise be impossible for human traders. By the end of this book, you’ll be able to use Python libraries to conduct key tasks in the algorithmic trading ecosystem. Note: For demonstration, we're using Zerodha, an Indian Stock Market broker. If you're not an Indian resident, you won't be able to use Zerodha and therefore will not be able to test the examples directly. However, you can take inspiration from the book and apply the concepts across your preferred stock market broker of choice.
Table of Contents (16 chapters)

Placing a cover limit order

Cover orders are complex orders that are meant to help to limit the loss within predefined values if trade becomes unfavorable. A cover order is essentially a combination of two regular orders—an initial order and a stoploss order, which act together to help to limit the loss in case trade becomes unfavorable.

Please refer to the introduction of the Placing a cover market order recipe for an in-depth understanding of the working of cover orders. You can use a cover limit order if you want to place a buy cover order below the market price or a sell cover order above the market price. This recipe demonstrates the placing of the following cover limit orders and querying their statuses:

The following are references to the state machine diagrams for a cover limit order:
  • Initial order: Refer to the state machine diagram from the Placing a regular limit order recipe in the previous...