What it is
PPO uses the same building blocks as MACD but divides by the slow average. That turns the result into a percentage, so a PPO of 0.5 means the fast average is half a percent above the slow one on any market or any price level.
That matters when comparing markets, or when looking at the same market over a long history where price has doubled. MACD values grow with price; PPO values do not. The histogram shows the gap between PPO and its signal line.
How it is calculated
1. Work out the 12 period exponential moving average (EMA) of the close. 2. Work out the 26 period EMA. 3. PPO = 100 times (12 EMA minus 26 EMA) divided by the 26 EMA. 4. Signal line = a 9 period EMA of the PPO. 5. Histogram = PPO minus the signal line.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Fast | 12 | 1 to 200 | Length of the fast EMA. |
| Slow | 26 | 2 to 400 | Length of the slow EMA, also the divisor for the percentage. |
| Signal | 9 | 1 to 100 | Length of the EMA that smooths PPO into the signal line. |
How to read it
How to trade it
- 1
On a 4 hour gold chart, use PPO above zero as the trend filter: only look for buys.
- 2
Wait for a pull-back that takes PPO below its signal line, then buy when it crosses back above on a closed candle.
- 3
Place the stop below the pull-back low, often 20 to 30 points on 4 hour gold.
- 4
Target 2 times the stop, and consider exiting when the histogram has shrunk for three candles in a row.
- 5
On US30, run the same rules for sells when PPO is below zero.
A buy on a signal line cross is proved wrong when PPO crosses back below the signal line and price closes below the pull-back low, or PPO itself drops below zero.
WickSpeak runs in your browser with nothing to install. When you add the Percentage Price Oscillator, it writes a plain-English reading on the live candle: what the indicator is, what it is doing right now, how to trade it and what would prove that reading wrong. It says whether PPO is above or below zero and its signal line, whether the histogram is growing or shrinking, and what that means for the move.
In Playbook, our no-code strategy builder, PPO can be a condition in a play. It can test whether PPO: crosses above its signal line; crosses below its signal line; crosses above zero; crosses below zero; is above zero; is below zero; is rising; is falling. Each condition can run on any of 12 timeframes from 1 minute to weekly, combined with up to 11 others, and the play can be backtested on past candles with your own costs and turned into alerts on screen, by email or by phone push.
There is also a WickSpeak Percentage price osc. Its line is coloured by strength: faint when the push is weak, glowing when it is strong, mint above zero and pink below it. Crosses of zero are marked only once the candle has closed, so a marker never appears and then vanishes mid-candle. A gold marker shows a stretched reading, meaning the strongest few percent of its own range or a reading past a fixed extreme level. Divergences between price and the oscillator are drawn on both the chart and the indicator, and a chip shows the same reading on a higher timeframe.
Best markets and timeframes
Works on gold, indices and forex on 1 hour to daily charts. Especially useful for comparing momentum between markets or over long histories.
Common mistakes
- Treating every signal line cross as a trade, including those in flat markets.
- Thinking PPO gives different signals from MACD; the crossovers happen at the same times.
- Ignoring the trend and buying crosses far below zero.
Works well with
Questions traders ask
What is the difference between PPO and MACD?
MACD is the difference between two EMAs in price units. PPO divides that difference by the slow EMA and shows it as a percentage. Crosses happen at the same times, but PPO values compare fairly across markets.
What are the standard PPO settings?
12, 26 and 9, the same as MACD: a 12 period fast EMA, a 26 period slow EMA and a 9 period signal line.
What does a PPO of 1 mean?
It means the fast average is 1 percent above the slow average. A negative reading means the fast average is below.
When should I use PPO instead of MACD?
Use PPO when comparing momentum between markets with very different prices, or when looking back over years where price has changed a lot. For a single market on a short chart, both read the same.