I took 100 Trades with the PPO Trading Strategy. Wait a minute… didn’t I just say PPO was just a better version of the MACD for doing just one thing? Well, yes! Everything I said in that video is how you are supposed to use the PPO indicator. But as I said in that video, for some reason, the Percentage Price Oscillator on TradingView does not come with the default settings as MACD. So I tested the PPO indicator 100 times to see if it can make more money and have a good win rate with its unique default settings and without a signal line. Here’s what happened.
The Percentage Price Oscillator trading strategy goes something like this. You buy when the PPO line crosses above the zero line. And you sell when the PPO line crosses below the zero line. Simple as that. We will use the 200 period moving average to find the trend. We will only take long PPO crossovers when the price is above the 200 EMA with the stoploss below the pullback. And we will only take short crossovers when the price is below the 200 EMA with the stoploss above the pullback.
With the lack of a signal line and the zero line crossover entry condition, the PPO trading strategy was giving entry signals few candles late than the MACD entry signal. But on TradingView, since the PPO uses slightly faster-moving averages by default, the PPO indicator was reacting the price movement a bit faster than the MACD line and was giving entry signals where MACD wouldn’t. This was not exactly a bad thing, because many of these entry signals were won. The problem began when the PPO indicator started to give late signals because of the zero line crossover condition. In simple words, by the time the PPO line gives an entry signal, many times the price would have already made a good move in the entry direction, making the stoploss too far and the higher reward risk ratio profit target even farther. These signals were late than the MACD signals.
Still, the PPO Trading Strategy was not giving multiple signals in a short amount of time, which resulted in fewer false signals in a row and the profit graph in the Trading Rush App went in the upward direction more consistently than one might expect. The PPO Trading Strategy didn’t have big spikes in the profit graph when compared to some other strategies we have tested and lost 6 trades in a row and won 5 trades in a row. After 100 Trades, the Percentage Price Oscillator got an approximate win rate of 48 percent which is a profitable win rate because of the 1.5 to 1 reward risk ratio.
5.8+7.5+6+6+7.3
As for the TR Score, the PPO strategy gets a TR Score of 32.6 out of 50, and ranks 9th from the top, below the Alligator Trading Strategy, and above the Moving Average Crossover Strategy.
