Advanced Tools Plug-in Training

PPO - Percentage Price Oscillator Indicator

The PPO indicator shows the relationship between two moving averages. The PPO indicator is a modification of the highly regarded and effective MACD indicator. This enhancement provides us the ability to receive the differences between the two moving averages as a percentage. This allows the trader to compare stocks with different prices more easily. For example, a PPO result of 20 means that the short term average is 20% above the long term average.

Calculation

To calculate the PPO, subtract the 26-day exponential moving average (EMA) from the nine-day EMA, and then divide this difference by the 26-day EMA. The end result is a percentage that tells the trader where the short-term average is relative to the longer-term average.

PPO = (Fast_EMA - Slow_EMA) / Fast_EMA

Additionally, the PPO histogram can be calculated by using the MA of a PPO itself:

PPO_Histogram = PPO - EMA_PPO

Buy/Sell Signals

Buy signals are generated when the PPO line crosses above the trigger line.

Sell signals are generated when the PPO line crosses below the trigger line.