Detrended Price Oscillator (DPO) - Built-in Indicator Guide

Computes Detrended Price Oscillator as difference between price and a shifted simple moving average, with optional centering.

Overview

The Detrended Price Oscillator (DPO) removes the trend component from price by subtracting a simple moving average that is shifted in time. It is meant for identifying cyclical swings around a trend, showing whether price is relatively above or below the middle of the averaging window.

The indicator draws a green line that oscillates around a grey zero level. A length parameter controls the averaging period, and a centered boolean switches between comparing current price to an older moving average and comparing older price to the current moving average.

How it works

1. Read user parameters length and centered from the settings UI.
2. Compute bars_back = length // 2 + 1, the number of bars used for the time shift.
3. Create a simple moving average of close over length bars using Sma.new, which returns a series.
4. If centered is false, subtract the SMA value from bars_back bars ago from the current close: close[0] - ma[bars_back].
5. If centered is true, subtract the current SMA from the close value bars_back bars ago: close[bars_back] - ma[0].
6. Return the result as a green line with offset=-bars_back when centered, otherwise with offset=0.

Mathematical model

Let (n = \text{length}), (b = \lfloor n/2 \rfloor + 1), and (\text{SMA}t = \frac{1}{n}\sum{i=0}^{n-1} \text{close}_{t-i}).

Non-centered mode:

Centered mode:

In centered mode the plotted value is also shifted left by (b) bars via the offset parameter.

Logic flow

flowchart TD
    A["Start"] --> B["Read length and centered"]
    B --> C["bars_back = length // 2 + 1"]
    C --> D["ma = Sma.new(close, length)"]
    D --> E{"centered is true"}
    E -- "yes" --> F["dpo = close[bars_back] - ma[0]"]
    E -- "no" --> G["dpo = close[0] - ma[bars_back]"]
    F --> H["offset = -bars_back"]
    G --> I["offset = 0"]
    H --> J["plot.Line(dpo, offset)"]
    I --> J

Parameters

Code walkthrough

Indicator declaration and settings

Lines 6-10 of Detrended Price Oscillator.indie5:

@indicator('DPO', format=format.PRICE)  # Detrended Price Oscillator
@param.int('length', default=21, min=1)
@param.bool('centered', default=False, title='Centered')
@level(0, line_color=color.GRAY, title='Zero')
@plot.line(color=color.GREEN, title='Detrended Price Oscillator')

The decorators define the indicator name, price formatting, the integer length parameter with a default of 21, a boolean centered option, a grey zero level, and a green line plot. These decorators generate the settings UI and the chart appearance.

Shift calculation

Lines 11-13 of Detrended Price Oscillator.indie5:

def Main(self, length, centered):
    bars_back = length // 2 + 1
    ma = Sma.new(self.close, length)

bars_back is derived from length using integer division; it determines how far the price or moving average is shifted. Sma.new(self.close, length) creates a simple moving average series that can be indexed with [0] for the current bar or [bars_back] for earlier bars.

DPO modes and output

Lines 14-15 of Detrended Price Oscillator.indie5:

    dpo = self.close[bars_back] - ma[0] if centered else self.close[0] - ma[bars_back]
    return plot.Line(dpo, offset=-bars_back if centered else 0)

The conditional expression selects the centered or non-centered formula. plot.Line(dpo, offset=-bars_back if centered else 0) draws the value as a line; the negative offset in centered mode shifts the plot left by bars_back bars so the oscillator aligns with the center of the moving average window.

Reading the chart

• The grey horizontal line marks the zero level.
• The green line is the DPO value; positive values sit above zero, negative values below.
• In default non-centered mode, a positive value means the current close is above the simple moving average from bars_back bars ago.
• In centered mode, the value at a chart bar is the close from bars_back bars earlier minus the moving average calculated later, shifted left so it compares price with the center of the window.
• Zero crossings occur when the relationship between price and the shifted moving average changes sign.

Implementation notes

• bars_back = length // 2 + 1 uses integer division, so the shift is not always exactly half the period.
• In centered mode, the plotted value at a historical bar is based on data from later bars because it uses the current SMA and then offsets the line backward.
• ma[bars_back] indexes the SMA series from bars_back bars ago, while close[bars_back] indexes historical close prices.
• The format=format.PRICE decorator causes the oscillator values to be displayed using price formatting.

FAQ

How do I change the smoothing period?

Set the length parameter to any integer greater than or equal to 1. The default is 21, and bars_back is recalculated automatically from this value.

What does the centered option do?

When centered is true, the DPO uses a close value from bars_back bars ago minus the current SMA and plots the line with a negative offset. When false, it uses the current close minus the SMA from bars_back bars ago with no offset.

Does this indicator generate buy or sell signals?

No. The script only plots the oscillator line and a zero level. It contains no signal logic, alerts, or trade entries.

Full source code

Indie Script v5, the built-in indicator as shipped with TakeProfit. Add it from the indicators menu or copy the code into the platform’s script editor.

# indie:lang_version = 5
from indie import indicator, format, param, level, color, plot
from indie.algorithms import Sma


@indicator('DPO', format=format.PRICE)  # Detrended Price Oscillator
@param.int('length', default=21, min=1)
@param.bool('centered', default=False, title='Centered')
@level(0, line_color=color.GRAY, title='Zero')
@plot.line(color=color.GREEN, title='Detrended Price Oscillator')
def Main(self, length, centered):
    bars_back = length // 2 + 1
    ma = Sma.new(self.close, length)
    dpo = self.close[bars_back] - ma[0] if centered else self.close[0] - ma[bars_back]
    return plot.Line(dpo, offset=-bars_back if centered else 0)