Definition
ROC expresses momentum as a percentage, making it easier to compare across different price levels. A ROC of 10% means price is 10% higher than n periods ago. It oscillates around zero and can signal overbought/oversold when at extremes.
Formula
ROC = ((Current Price - Price n periods ago) / Price n periods ago) × 100
Example
If price rose from $50 to $55 over 10 days, ROC = (55-50)/50 × 100 = 10%. This 10% gain in 10 days indicates strong bullish momentum.
FAQ
What is Rate of Change (ROC)?
The percentage change in price over a specific period.
How do you calculate Rate of Change (ROC)?
A common formula for Rate of Change (ROC) is: ROC = ((Current Price - Price n periods ago) / Price n periods ago) × 100
Why is Rate of Change (ROC) important?
Rate of Change (ROC) helps investors evaluate technical analysis and make more informed decisions.