- [Instructor] Now that we have a better understand…of basic algorithmic trading, we may want to go through…and use macro economic data to better forecast…what we think will be important variables…that would lead to changes in various stock prices.…To do that one of the steps that we'll need…to follow is to run what's called a regression analysis.…Now, in order to run regression analysis…we're going to need a specific tool in the data tab.…This is the Data Analysis tool.…If you don't have this tool, you'll need to install it.…
To do that go to file, options,…add-ins, manage Excel add-ins and click Go.…And then make sure this box…that says Analysis Toolpak is checked.…Click OK, and you should see a box that'll appear…over here under your data tab that says Data Analysis.…If we click on that box we can scroll down…and we'll find the regression option.…
We're going to click OK.…Now what we need to do in this case…is to run what's called a regression.…A regression is a model that tells us…the relationship between different types of variables.…
Professor Michael McDonald provides a brief primer on securities markets. He explains how data helps investors forecast performance and automate trading. Then he moves into the practical steps: coming up with algorithmic trading rules and developing and testing an algorithm. Finally, he shows how the algorithm can be applied and eventually expanded to other securities. Anyone working in financial services, or interested in investing in the stock market, will be able to use these tutorials to understand and develop simple trading algorithms of their own.
- Define what a share of stock is.
- Classify the type of trading that attempts to capitalize on the bid-ask spread.
- Name the rule that can be used as a metric for Fed interference in the market.
- State the first step in a data analysis project.
- Identify the type of characteristic algorithmic trading relies on.
- Break down how VAR is used to manage risk.