Percentage Price Oscillator and Its Signal Line
Summary
The Percentage Price Oscillator (PPO) expresses the gap between a short and a long exponential moving average as a percentage of the long average. The document uses nine-day and 26-day averages, making the value comparable across instruments with different price levels. A reading of 10 means the short average is 10% above the long average.
The PPO and MACD track the same moving-average relationship, but MACD reports the raw difference while PPO reports a percentage. The extended version adds a signal line calculated with an EMA, which the document says makes its signals somewhat faster than those of the basic version. It offers no performance data, entry or exit rules, or parameter testing, so it describes an indicator rather than a complete trading strategy.
Key ideas
- PPO measures the gap between short- and long-term EMAs relative to the long-term EMA.
- The example uses nine-day and 26-day EMAs.
- Expressing the gap as a percentage helps compare instruments with different prices.
- The extended version adds an EMA-based signal line that is described as faster than the basic version.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.