Beginners must grasp variable scope to create good trading strategies. Programs utilize variables to store data, and their scope determines where they may be used.
Local Focus
Local scope is the simplest trading variable scope. Variables defined in a function or block of code have local scope and may only be accessed there. As an example:
def calculate_indicator():period = 14# rest of the code# 'period' is only accessible within the 'calculate_indicator' function
Global Scope
Global scope lets program variables be accessible from anywhere, unlike local scope. A variable defined outside of functions or blocks has global scope and may be accessed by any program element. As an example:
total_profit = 0def calculate_profit():# accessing 'total_profit' from the global scopeglobal total_profit# rest of the code# 'total_profit' can be accessed anywhere in the program
The enclosing scope is another trade variable scope. This happens when nested functions create variables. In this situation, the inner function may access its local variables and outer function variables. Inner function variables are inaccessible to the outer function. As an example:
def calculate_strategy():initial_balance = 100000def calculate_position_size():# accessing 'initial_balance' from the enclosing scopenonlocal initial_balance# rest of the code# 'initial_balance' is accessible within 'calculate_strategy' but not within 'calculate_position_size'
External Module Import
External modules are often used in trading to acquire data, calculate, and execute strategies. You may access external module variables and functions in your application when you import them. As an example:
import pandas as pddef calculate_moving_average():# accessing 'pd' module for calculating moving average# rest of the code
Conclusion
Developing trading strategies requires understanding variable scope, which defines variable accessibility and visibility throughout your application. Local, global, enclosing, and imported module scopes help traders leverage variables.