Introduction
The Percentage Price Oscillator is a momentum oscillator that measures the difference between two moving averages as a percentage of the larger moving average.
The PPO and the moving average convergence divergence 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.
Formula
Percentage Price Oscillator (PPO) = { (12-day EMA - 26-day EMA) / 26-day EMA } * 100
Advantage
PPO expresses the difference between moving average as a percentage. This allows a trader to use the PPO indicator to compare stocks with different prices more easily.