Percentage Price Oscillator: A Normalized Moving Average Momentum Indicator

Summary

The Percentage Price Oscillator (PPO) is a momentum indicator that expresses the gap between a short and a long exponential moving average as a percentage of the long average. The document gives a common configuration using nine day and 26 day EMAs: subtract the longer EMA from the shorter EMA, then divide by the longer EMA. A positive PPO means the short average is above the long average; its percentage scale makes readings easier to compare across instruments with different price levels.

The PPO is contrasted with MACD, which reports the raw difference between the same averages rather than scaling that difference by the longer EMA. The document explains the calculation and comparison but offers no entry or exit rules, backtest, or evidence that the indicator predicts returns. Traders would need to choose how to interpret signals and test them in their own markets and timeframes.

Key ideas

• The PPO measures the difference between short and long exponential moving averages relative to the long average.
• The described configuration uses nine day and 26 day exponential moving averages.
• Unlike MACD’s raw moving average difference, PPO expresses the gap as a percentage.
• The percentage scale can help compare momentum readings across assets with different price levels.
• The document defines the indicator but does not establish a trading rule or predictive performance.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.