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Rate of Change (ROC)

Also known as just 'momentum', this indicator is a pure momentum oscillator. It produces a number that is the percentage that the previous period has changed.

Example

Interpretation

This oscillator gauges the change in price over a given period of time. If the Rate of Change is positive, then price is rising. If the ROC is negative, then price is falling. The faster the price rises the higher the ROC will be. The faster the price falls, the lower and more negative the ROC will be.

The ROC can only go down to 0, which means the price is zero. But it can go up without any boundry. This makes it possible to define overbought and oversold conditions.

Calculation

ROC = [(Close - Close n periods ago) / (Close n periods ago)] * 100

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