Trading PPO Divergences with Price and Oscillator Pivots

Summary

This strategy seeks bullish and bearish divergences between price pivots and the Percentage Price Oscillator (PPO). It derives PPO from fast and slow exponential averages, smooths the result, and identifies local highs and lows in both the oscillator and price. Divergence conditions compare recent pivots, with optional longer-term checks over a configurable lookback. Bullish signals open long positions and bearish signals open shorts; the code closes those positions when the PPO forms an opposite pivot.

The document describes the approach as trend trading and gives parameter settings and a BTC-USDT futures backtest period, but provides no performance statistics or evidence that the signals are profitable. It acknowledges that divergence identification can lag or misclassify turns, and that the stop logic does not reliably constrain the size of a loss. Despite the overview’s reference to price highs and lows for exits, the source closes positions on oscillator pivots. Fees and slippage may also affect results, and the pivot logic and execution behavior merit independent review.

Key ideas

• The strategy calculates a smoothed PPO from fast and slow exponential moving averages.
• It detects divergence by comparing recent price pivots with PPO pivots, including optional longer-term conditions.
• Bullish divergence opens a long position, while bearish divergence opens a short position.
• The source closes positions on opposite oscillator pivots, although the overview describes price highs and lows as exits.
• The document reports no backtest results and warns about lag, uncertain divergence recognition, loss control, fees, and slippage.

Tags

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