Percent Difference Oscillator Indicator
Platform: MT5 Type: Oscillator Last update: September 22, 2024The Percent Difference Oscillator (PDO) indicator is, as the name suggests, an oscillator that shows the difference between the moving average and the current close price. Results are provided as the percent of the moving average (above or below the MA).
The formula for the Percent Difference Oscillator indicator is the following:
PDO = 100*(Close – MA)/MA
When the olive line of the PDO breaks above the zero level, the price is considered to be entering a bullish market state. Similarly, when the olive line of the PDO goes below the zero level, the price is considered to be entering a bearish market state.
You can successfully use divergences with that gauge. When the price is making higher highs and lower highs, you can look for bearish divergence. On the other side, when the price is making lower lows and higher lows, you can look for bullish divergence.
You can customize some inputs:
Period – defines the moving average calculation period;
Method – defines the moving average calculation method which can be expressed as simple, exponential, smoothed, and linear weighted;
Applied price – defines the moving average calculation price which can be expressed as close price, open price, high price, low price, median price, typical price, and weighted price.
