Indicator Help
Detrended Price Oscillator (DPO)
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Used to isolate shortterm 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:
 Decide on the time frame that you wish to analyze. Set n as half of that cycle period.
 Calculate a simple moving average for n periods.
 Calculate (n / 2 + 1)
 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 stoplosses 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 stoplosses 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.
