Percent Difference Oscillator: Measuring Close Price Deviation from a Moving Average
Summary
The Percent Difference Oscillator (PDO) expresses the gap between the current closing price and a moving average as a percentage of that average. Its calculation divides the close-minus-average difference by the average and multiplies by 100, so positive readings indicate that the close is above the average and negative readings indicate that it is below.
The indicator has three configurable inputs: the moving-average period, the moving-average calculation method, and the price used for the average. This makes the measure adaptable to different averaging choices while keeping its output scaled relative to the average’s level. The document explains the calculation and inputs but gives no interpretation thresholds, trading rules, performance evidence, or guidance for selecting parameters. It should therefore be treated as a price-distance indicator description, not as evidence that a particular signal or setting is profitable.
Key ideas
- PDO measures the close’s distance from a moving average as a percentage of that average.
- Positive values mean the close is above the average, while negative values mean it is below.
- The period, averaging method, and applied price are configurable inputs.
- The document provides no tested trading rules or evidence about profitable parameter choices.
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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.