What is the relationship between PPO and MACD?

What is the relationship between PPO and MACD?

The PPO is almost identical to the moving average convergence divergence (MACD) technical indicator. Both are momentum oscillators, which measure the difference between the two moving averages. However, there are differences between the two listed below:



Difference between the two, PPO and MACD

Here, the PPO measures the percentage difference between the two EMAs, while the MACD measures the absolute difference (in dollars).

MACD(12,26,9) calculated the absolute difference between the 12-day and 26-day EMA. On the other hand, PPO(12,26,9) MACD goes a step further by showing the percentage difference between these two MAs.

Percentage Price Oscillator (PPO) Formula and Calculation

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

PPO= 

26-period EMA

12-period EMA−26-period EMA

​ ×100

Signal Line=9-period EMA of PPO

PPO Histogram=PPO−Signal Line

where:

EMA=Exponential moving average

​Use with Sharp Charts

The PPO can be placed as an indicator above, below, or behind a stock's price chart. Once the indicator is selected from the dropdown list, the default parameter settings (12,26,9) appear. These settings can be adjusted to increase or decrease sensitivity. A slower long moving average combined with a faster short moving average increases sensitivity. The histogram can be suppressed by setting the signal line parameter to 1. This is useful when viewing the PPO behind a stock's price chart. Users can even add the signal line back by applying a 9-day EMA to the PPO. Click "Advanced Options" to add the moving average overlay for an indicator read more.

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