Rate of Change (ROC)
The Rate of Change indicator is used to calculate price momentum, like the Momentum indicator. The only difference is that for the Rate of Change the difference that is determined is divided by the closing price of n days ago and then multiplied by 100.Formula
where C is the closing price.
The parameter n, which indicates the distance of the last closing price. It can assume values between 1 and 500. The standard setting is 12.Interpretation
Here interpretation is exactly the same as for Momentum. Some technicians also use the ROC to analyze the trading volume. For this reason, this indicator is sometime known as the Volume Rate of Change.
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