StockFetcher Forums · General Discussion · Understanding PPO<< >>Post Follow-up
dsafari
43 posts
msg #174
Ignore dsafari
11/26/2002 4:45:44 AM

Hello all,

I am experimenting with the Price Percentage Oscillator (PPO). I'll use a small example to illustrate my understanding of it. Say I have requested PPO(20,60) it is my understanding that the 20 represents the EMA(20) and the 60 represents the EMA(60). When the EMA(20) is above the EMA(60) it should show a positive signal, and when the EMA(20) is below the EMA(60) it should show a negative signal. Are my assertions correct? It seems to me that the opposite is in effect. I gleaned this info from the following URI http://stockcharts.com/education/What/TradingStrategies/AHillMAcrossover.html

Any help in this subject would be appreciated, thank you in advance.


tomb
261 posts
msg #175
Ignore tomb
11/26/2002 7:39:37 AM

Hi,

You are correct that in "PPO(20,60)" the 20 represents an EMA(20) and the 60 represents an EMA(60). However, the value computed in the PPO is always the difference between the longer-term EMA from the shorter-term one. That difference is then divided by the short term EMA. Given this, if the EMA(60) is above the EMA(20) then the PPO will be positive.

Additionally, PPO(60,20) would produce the exact same results since the value is based on the length of the EMA's.

Hopefully that helps. If you are interested in the PPO actually using the order of periods that you specify, let us know and I am sure we can come up with a version that will do that!

Thanks again,

Tom
StockFetcher Support



dsafari
43 posts
msg #176
Ignore dsafari
11/26/2002 5:12:36 PM

Thanks for you reply tomb. Yeah i tried switching the order of the params around in hopes of showing a EMA(20) crossover on the EMA(60) as a positive instead of a negative and as you have said, it gives the same results.

For me personally it makes it easy to parse when I can equate the crossover to an increasing trend with an upward movement as opposed to a downward movement which is at is currently. It seems to work like that in the link I pasted in my previous post. Can we make our PPO behave similar?


tomb
261 posts
msg #191
Ignore tomb
12/3/2002 1:35:14 PM

Hi,

A quick update to let you know we have changed the PPO and APO computation to take the order of the periods into account. So now, PPO(20,60) produces different results than PPO(60,20).

So in the PPO(20,60) computation, the following occurs:

(EMA(20) - EMA(60))/EMA(60)

A positive value for the PPO in this case means the EMA(20) is above the EMA(60).

Thanks again for all of the feedback and let us know if you have any additional questions on this!

Tom
StockFetcher.com Support


StockFetcher Forums · General Discussion · Understanding PPO<< >>Post Follow-up

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