UTRADE-FX
06-20-2010, 06:22 PM
http://www.youtube.com/watch?v=mldJpRq3RjQ
Introduction
The Detrended Price Oscillator (DPO) is an indicator designed to remove trend from price and make it easier to identify cycles. DPO does not extend to the last date because it is based on a displaced moving average. However, alignment with the most recent price is not an issue because DPO is not a momentum oscillator. Instead, DPO is used to identify cycles and estimate cycle length.
Formula
Price {X/2 + 1} periods ago less the value of the X-period simple moving average.
X refers to the number of periods used to calculate the Detrended Price Oscillator. A 20-day DPO would use a 20-day SMA that is displaced by 11 periods {20/2 + 1 = 11}. This displacement shifts the 20-day SMA to the left by 11 days, which actually puts it in the middle of the 20-day look-back period. The value of the 20-day SMA is then subtracted from the price that is in the middle of this look-back period. In short, DPO(20) equals price 11 days ago less the 20-day SMA
USE
The Detrended Price Oscillator shows the difference between a past price and a simple moving average. In contrast to other price oscillators, DPO is not a momentum indicator. Instead, it is simply designed to identify cycles with its peaks and troughs. Cycles can be estimated by counting the periods between peaks or troughs. Users can experiment with shorter and longer DPO settings to find the best fit.
Introduction
The Detrended Price Oscillator (DPO) is an indicator designed to remove trend from price and make it easier to identify cycles. DPO does not extend to the last date because it is based on a displaced moving average. However, alignment with the most recent price is not an issue because DPO is not a momentum oscillator. Instead, DPO is used to identify cycles and estimate cycle length.
Formula
Price {X/2 + 1} periods ago less the value of the X-period simple moving average.
X refers to the number of periods used to calculate the Detrended Price Oscillator. A 20-day DPO would use a 20-day SMA that is displaced by 11 periods {20/2 + 1 = 11}. This displacement shifts the 20-day SMA to the left by 11 days, which actually puts it in the middle of the 20-day look-back period. The value of the 20-day SMA is then subtracted from the price that is in the middle of this look-back period. In short, DPO(20) equals price 11 days ago less the 20-day SMA
USE
The Detrended Price Oscillator shows the difference between a past price and a simple moving average. In contrast to other price oscillators, DPO is not a momentum indicator. Instead, it is simply designed to identify cycles with its peaks and troughs. Cycles can be estimated by counting the periods between peaks or troughs. Users can experiment with shorter and longer DPO settings to find the best fit.