PPO Divergence Entries with Percentage-Based Exits
Summary
This strategy uses the Percentage Price Oscillator (PPO) to identify possible reversals when price and momentum diverge. It calculates PPO from fast and slow exponential moving averages, then compares successive price and PPO pivot highs or lows. A lower price low paired with a higher PPO low signals a potential long; a higher price high paired with a lower PPO high signals a potential short. Entries are accompanied by percentage-based stop-loss and take-profit orders, and the script plots the PPO, signal line, and histogram for inspection.
The document provides the strategy rules and implementation, but no performance results or market-specific evaluation. Pivot points require bars on both sides for confirmation, so signals are delayed; the text does not discuss that timing caveat. The code also stores PPO values when price pivots occur, without separately requiring a PPO pivot at the same point, which may affect how the divergence comparison behaves. The stated percentage exits and default position sizing are configurable, but their suitability and results are not established here.
Key ideas
- The strategy compares consecutive price lows and highs with PPO values to flag bullish or bearish divergence.
- PPO is calculated from the difference between fast and slow exponential moving averages, expressed as a percentage of the slow average.
- A bullish divergence occurs when price makes a lower low while PPO makes a higher low.
- A bearish divergence occurs when price makes a higher high while PPO makes a lower high.
- Entries use percentage-based stop-loss and take-profit levels, but the document provides no evidence of profitability.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.