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10.29 Pretty Good Oscillator

The “Pretty Good Oscillator” (PGO) by Mark Johnson measures the distance of the current close from its N-day simple moving average (see Simple Moving Average), expressed in terms of an average true range (see Average True Range) over a similar period.

      close - SMA[N] of closes
PGO = ------------------------
        EMA[N] of true range

So for instance a PGO value of +2.5 would mean the current close is 2.5 average days’ range above the SMA.

Johnson’s approach was to use it as a breakout system for longer term trades. If the PGO rises above 3.0 then go long, or below -3.0 then go short, and in both cases exit on returning to zero (which is a close back at the SMA).

10.29.1 Additional Resources

Copyright 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2014, 2015, 2016, 2017 Kevin Ryde

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