# Definition of the percentage price oscillator (PPO)

By Mark Holland / last week

## What is the percentage price oscillator (PPO)?

The Percent Price Oscillator (PPO) is a technical momentum indicator that shows the relationship between two moving averages in percentage terms. Moving averages are a 26-period and 12-period exponential moving average (EMA).

The PPO is used to compare the performance and volatility of assets, detect divergences that could lead to price reversals, generate trade signals, and help confirm the direction of the trend.

### Key takeaways

• The PPO generally contains two lines: the PPO line and the signal line. The signal line is an EMA of the PPO, so it moves slower than the PPO.
• Some traders use the PPO that crosses the signal line as a trading signal. When it crosses up from below, that is a buy, and when it crosses down from above, that is a sell.
• When the PPO is above zero, that helps to indicate an uptrend as the short-term EMA is above the longer-term EMA.
• When the PPO is below zero, the short-term average is below the long-term average, which helps indicate a downtrend.

## Formula and calculation of the percentage price oscillator (PPO)

Use the following formula to calculate the relationship between two moving averages for a holding.