Abstract: A method and apparatus for determining a condition of a fluid which circulates within a fluid circuit in which the optical characteristics of the fluid change dynamically due to the presence of physical contaminates in the fluid. An optical source is provided for generating light, and an optical detector is provided for receiving the light from the optical source. The fluid is positioned between the optical source and the optical detector. A signal analyzer is coupled to the optical detector. The signal analyzer monitors an output of the optical detector and determines the condition of the fluid in accordance with the output of the optical detector. Such fluid circuits are used in liquid type electrical transformers used for power distribution in the electrical power industry.