Advanced Tools Plug-in:
ROC - Rate of Change Indicator
The ROC indicator is used to help a trader determine the rate at which a market is either increasing or decreasing in strength or weakness. A rising rate of change indicates an advancing market, while a decreasing rate of change indicates a declining market.
As the rate of change line approaches the centerline, the rate of change is considered to be in equilibrium. This is somewhat of a misnomer, since the ROC is on a relative scale and scales against historical rates. What is equilibrium today will not be the equilibrium line down the road, and what is not equilibrium today will appear to be so from a historical point of view.
Comparing the ROC’s of different time-spans improves the accuracy of the analysis. A 12 month period is usually the most reliable for long-term trends, and a 3 or 6 month period works well for intermediate trends. A 10 or 12-day ROC is a good short-term indicator, oscillating in a fairly regular cycle.
The lower the ROC, the more undersold the market and the more likely a recovery. Although the opposite may hold true in that the higher the ROC, the more overbought the market, both extremes can indicate the formation of a sideways channel.
Calculation
ROC = 100 * (Today’s close - Close 10 periods ago) / (Close 10 periods ago)
Buy / Sell Signals
Track ‘n Trade does not generate buy and sell signals from the ROC indicator. The ROC indicator is for momentum calculations only, and meant to be used in combination with other signal generating indicators.
Rate of Change (ROC)
The ROC Indicator is included with the Advanced Tools Plug-in.
To View a list of all of the indicators that are included with your purchase of the Advanced Tools Plug-in Click Here
