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Indicator Help

Indicator Index
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  1. Accumulation / Distribution
  2. Aroon Oscillator *
  3. Aroon Up/Down *
  4. Average Directional Index
  5. Average True Range
  6. Bollinger Bands
  7. Bollinger Band Width *
  8. Chaikin Money Flow Index *
  9. Chaikin Oscillator *
  10. Chaikin Volatility *
  11. Close Location Value *
  12. Commodity Channel Index
  13. Detrended Price Oscillator *
  14. Donchian Channel *
  15. Donchian Channel Width *
  16. Ease of Movement *
  17. Exponential Moving Average
  18. MACD
  19. Mass Index *
  20. Momentum
  21. Money Flow Index
  22. Negative Volume Index *
  23. On Balance Volume
  24. Pcnt Price Oscillator *
  25. Pcnt Volume Oscillator *
  26. Performance *
  27. Positive Volume Index *
  28. Price Envelope
  29. Price Volume Trend *
  30. Rate of Change
  31. Relative Strength Index
  32. Simple Moving Average
  33. Stochastic - Fast
  34. Stochastic - Slow
  35. Stochastic RSI *
  36. Standard Deviation *
  37. Triple Moving Average *
  38. TRIX *
  39. Ultimate Oscillator
  40. Volume
  41. Weighted Moving Average *
  42. Williams Percent R

Detrended Price Oscillator (DPO)

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Used to isolate short-term cycles, Detrended Price Oscillator compares closing price to a prior moving average, eliminating cycles longer than the moving average.

The real power of the Detrended Price Oscillator is in identifying turning points in longer cycles:

  • When Detrended Price Oscillator shows a higher trough - expect an upturn in the intermediate cycle;
  • When Detrended Price Oscillator experiences a lower peak - expect a downturn.

Calculation

To calculate the Detrended Price Oscillator:

  1. Decide on the time frame that you wish to analyze. Set n as half of that cycle period.
  2. Calculate a simple moving average for n periods.
  3. Calculate    (n / 2 + 1)
  4. Subtract the moving average, from (n / 2 + 1) days ago, from the closing price:

                DPO = Close - Simple moving average [from (n / 2 + 1) days ago]

Parameters

  • Period (20) - The number of bars on the chart.

Trading Signals

First, estimate the maximum length of the cycle that you wish to track. Use half of the cycle length as the MA period. The Detrended Price Oscillator is most effective with indicator periods of 21 days or less.

Ranging Markets

Set overbought and oversold levels based on observation of past price behavior.

  • Go long when Detrended Price Oscillator crosses below and then back above the oversold level.
  • Go short when Detrended Price Oscillator crosses above and then back below the overbought level.

Use stop-losses at all times.

Trending Markets

Only trade in the direction of the trend.

  • Go long when Detrended Price Oscillator crosses below zero and then turns back above.
  • Go short when Detrended Price Oscillator crosses above zero and then turns back below.

Only execute trades if the trend is intact (price does not close below the MA). Exit using a trend indicator.

Use stop-losses to protect your position.

Alternative (and more aggressive) rules:

  • Go long when Detrended Price Oscillator forms a higher trough.
  • Go short when Detrended Price Oscillator forms a lower peak.

Trade only in the direction of the trend and always use stop losses.


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