Indicators: Percentage Price Oscillator
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Percentage Price Oscillator:
The Percentage Price Oscillator (PPO) is a technical Momentum indicator showing the relationship between two Moving Averages. 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.
Calculated as:
The PPO and the moving average convergence divergence (MACD) are both momentum indicators that measure the difference between the 26-day and the nine-day Exponential Moving Averages. The main difference between these indicators is that the MACD reports the simple difference between the Exponential Moving Averages, whereas the PPO expresses this difference as a percentage. This allows a trader to use the PPO indicator to compare stocks with different prices more easily. For example, regardless of the stock's price, a PPO result of 10 means the short-term average is 10% above the long-term average.
Author: Mladen Rakic