The Percentage Price Oscillator is an MT4 momentum indicator. It continuously monitors the momentum’s strength changes and delivers trend-reversal signals when the price attempts to rebound from a market high or low.
A swing trader’s primary target is to make entries at the peak or bottom of a market range in day trading. So, they require identifying the periods when the price loses its current momentum at a sensitive level and is likely to make a reverse move. In that regard, the Percentage Price Oscillator is very quick in detecting the reversal intentions of the price and generating real-time buy/sell signals.
The Percentage Price Oscillator applies a 12-period fast-EMA, 26-period slow-EMA, and a 9-period signal-EMA for examining the momentum condition. It uses a PPO line and a signal line to compare the actual and average momentum value.
Understanding the Percentage Price Oscillator’s signals is quite simple and easy, especially for the newbie market speculators. The indications for going long or short depends on the crossovers between the PPO and signal lines.
Consider it a bullish trend signal when the PPO moves above the signal line under the zero level. The indicator value turns positive following such a bullish crossover means the price has already begun its bullish move towards the north.
For trade-exits, you need to consider opposite crossovers between the indicator lines compared to your entry direction. For instance, exit long right after the PPO level drops below the signal line while holding their position above zero-line.
Percentage Price: Buy Conditions
- The indicator value is lesser than 0
- The PPO level moves above the signal line
- Exit long when the PPO turns lower than the signal line
Percentage Price: Sell Conditions
- The indicator value rises above zero-level
- The PPO level moves below the signal line
- Exit short right after the PPO crosses above the signal line