Percentage Price Oscillator - PPO

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DEFINITION of 'Percentage Price Oscillator - PPO'

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:

Percentage Price Oscillator (PPO)



INVESTOPEDIA EXPLAINS 'Percentage Price Oscillator - PPO'

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.

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RELATED FAQS
  1. What is a common strategy traders implement when using the Percentage Price Oscillator ...

    A common trading strategy stock traders implement using the percentage price oscillator (PPO) involves using the indicator ... Read Full Answer >>
  2. Why is the Percentage Price Oscillator (PPO) important for traders and analysts?

    The percentage price oscillator (PPO) is a technical trading indicator that traders and analysts primarily use for measuring ... Read Full Answer >>
  3. What are the best technical indicators that complement the Percentage Price Oscillator ...

    The percentage price oscillator (PPO) is calculated by subtracting a long-term exponential moving average (EMA) from a shorter-term ... Read Full Answer >>
  4. How do I use Percentage Price Oscillator (PPO) to create a forex trading strategy?

    The percentage price oscillator (PPO) is a momentum indicator that is essentially a variation on the popular moving average ... Read Full Answer >>
  5. What does a cross over on the Percentage Price Oscillator (PPO) mean?

    A crossover on the percentage price oscillator (PPO) indicates a shift in market momentum, either from buying to selling ... Read Full Answer >>
  6. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
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