Developer Explains How SMA and RSI Indicators Work Together in Trading Strategies
A software developer shared a technical walkthrough on DEV Community detailing how Simple Moving Average (SMA) and Relative Strength Index (RSI) indicators can be combined to build algorithmic trading strategies. SMA smooths price data over a set look-back window to reveal underlying trends, while RSI measures the speed and magnitude of price changes on a scale of 0 to 100. A reading above 70 suggests overbought conditions, while below 30 indicates oversold territory. The author initially built manual loop-based Python implementations but found them slow and prone to look-ahead bias errors. Switching to pandas' vectorized rolling operations resolved these issues and enabled cleaner, more reliable signal generation.
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