Extra indicators
ROC: Rate of Change
How much the price has changed in per cent compared with N candles ago.
The idea in plain words
ROC is momentum in its simplest form: the percentage move over a fixed look-back. Above zero the price is higher than it was, below zero lower.
How it is calculated
Divide the change since N candles ago by the price N candles ago and multiply by 100.
ROC = (close − close[N]) ÷ close[N] × 100How to use it
- Crossing zero: momentum turns positive or negative.
- Divergence: price makes a new high while ROC does not.
Drawing conclusions
- Extreme readings compared with the ticker's own history often come before pauses.
Example
AAPL daily, ROC(12) = +8%: the price is 8% above where it was 12 sessions ago.
Prices in examples are illustrative.
Watch out for
- One unusual candle N candles ago makes ROC jump when it drops out of the window.
A little history
One of the oldest momentum measures, used by stock traders well before computers.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.