Percentage Price Oscillator: Relative Moving-Average Momentum
Summary
The Percentage Price Oscillator (PPO) expresses the difference between a faster and slower moving average as a percentage of the slower average. The example uses 12-period and 26-period exponential moving averages, with a switch that can instead return the raw difference and a setting that permits other averaging methods. The percentage form makes the spread interpretable across instruments with different price levels.
A second version adds a signal average and a histogram equal to the PPO minus that signal line, much like a MACD presentation. These components can be used to observe momentum changes and crossovers, but the document does not specify a complete entry or exit system and provides no empirical performance evidence. The stated periods are examples rather than universal settings; usefulness depends on the chosen market, timeframe, and validation method.
Key ideas
- PPO scales the difference between fast and slow moving averages by the slow average.
- The example uses 12-period and 26-period exponential averages, with configurable average types.
- A signal average and difference histogram provide additional views of momentum changes.
- Percentage scaling supports comparison across assets with different nominal prices.
- The document supplies indicator implementations but no tested trading rules or performance results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.