Pretty Good Oscillator (PGO)

How many average bar sizes the close is from its moving average.

What it measures

PGO, from Mark Johnson, divides the distance between the close and its simple moving average by an exponential average of the true range of the same length, the measure behind the Average True Range. A reading of 3 means the close is three typical bars above its average.

How traders read it

Johnson’s rule buys a close above +3 and exits on a return to zero, and the reverse below −3; the chart draws lines at ±3. It is a breakout signal, not a reversal one.

Formula

PGO = (close − SMA(periods)) / EMA(true range, periods)

Johnson’s definition uses an ordinary EMA of the true range; Wilder’s ATR is a slower average and gave smaller swings.

Settings and output

Call: pgo(periods)

Setting	Chart default
`periods`: Periods	14

What you get: a number.

Warm-up: with pgo(14), it asks for 14 bars of history and a run-up of 15, and its first value came on bar 29 of the example data.

Chart

Pretty Good Oscillator (PGO) drawn by its own code on example prices

The prices are made up, hourly, and the same on every page, so the chart shows how the indicator behaves, not how a market behaved.

In an algorithm

function onIntervalClose() {
  const value = pgo(14);
  if (OPEN_POSITIONS_COUNT === 0 && value > 3) {
    openPosition("BUY", { quantity: 10000, stopLossPips: 30, takeProfitPips: 60 });
  }
  if (OPEN_POSITIONS_COUNT > 0 && value < 0) {
    closeAllPositions();
  }
}