Price Rate-of-Change (ROC)

Price Rate-of-Change (Price ROC) measures the percent change in price of a security over a set period of time. Price ROC is the same as the Momentum indicator, except that Price ROC is expressed as a percent and Momentum is expressed as a ratio. An inverse indicator of security price movements is used to determine whether a stock has been overbought or oversold.

The Price ROC indicator displays the difference between the current price and the price x-time periods ago. The difference can be displayed in either points or as a percentage.

The faster prices fall, the faster the rate-of-change will fall, and the faster prices rise, the faster the ROC will rise. When the price and ROC diverge, or head in opposite directions, this is generally an indicator that a sharp incline or decline in price is on the way.

Calculations

When the rate-of-change displays the price change in points, it subtracts the price x-time periods ago from today's price:

Today's Close - Close x-periods ago

When the rate-of-change displays the price change as a percentage, it divides the price change by price x-time periods ago:

Sample Chart

The strategies described in this article are for information purposes only, and their use does not guarantee a profit. None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security. Investors should fully research any security before making an investment decision. Securities are subject to market fluctuation and may lose value.