Rate of Change (ROC)

Formula and components

The percentage change between the current price and price a fixed number of periods ago.

How it works

The indicator transforms price, range, or volume observations over a selected lookback. Shorter settings react faster but create more noise; longer settings respond more slowly and emphasize the underlying regime. Always compare the reading with price structure and timeframe.

How to read it

Positive ROC indicates appreciation over the lookback, negative ROC indicates decline, and slope describes acceleration or deceleration.

Practical example

A 20-day ROC of 8% means price is 8% above its close 20 sessions earlier. ROC crossing zero marks a change in direction over that exact horizon, while divergence only warns that the pace is changing.

Confirmation checklist

Compare the current reading with its centerline, thresholds, prior swing, and price action. Crossovers and divergences are context clues, not standalone entries.

Limitations and false signals

Results depend heavily on the chosen comparison point; a large move leaving the window can change ROC abruptly without a new price event.

Frequently asked questions