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Rate of Change (ROC)

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 26 Apr 2023

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Rate of Change (ROC)

Rate of Change (ROC) is a financial term used to measure the rate of change in the price of a security over a specific period of time. It is a technical indicator that is used to measure the speed and direction of price movements. The ROC is calculated by taking the difference between the current price and the price “n” periods ago, and then dividing it by the price “n” periods ago. The result is then expressed as a percentage. The ROC is a momentum indicator that can be used to identify potential buy and sell signals.

History of Rate of Change (ROC)

The Rate of Change (ROC) was developed by J. Welles Wilder in 1978 and is one of the most popular technical indicators used by traders. Wilder believed that the ROC was a better measure of momentum than the Relative Strength Index (RSI). The ROC is a momentum indicator that measures the rate of change in price over a given period of time. It is used to identify potential buy and sell signals, as well as to identify overbought and oversold conditions.

Comparison Table

Indicator Description
Rate of Change (ROC) Measures the rate of change in price over a given period of time.
Relative Strength Index (RSI) Measures the magnitude of recent price changes to evaluate overbought or oversold conditions.

Summary

The Rate of Change (ROC) is a technical indicator used to measure the speed and direction of price movements. It is a momentum indicator that can be used to identify potential buy and sell signals, as well as to identify overbought and oversold conditions. For more information on the ROC, traders can visit websites such as Investopedia, TradingView, and StockCharts.

See Also

  • Relative Strength Index (RSI)
  • Moving Average Convergence Divergence (MACD)
  • Average Directional Index (ADX)
  • On Balance Volume (OBV)
  • Stochastic Oscillator
  • Bollinger Bands
  • Parabolic SAR
  • Commodity Channel Index (CCI)
  • Williams %R
  • Money Flow Index (MFI)

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