GlossaryRate of Change (ROC)
Rate of Change (ROC)
Momentum as Rate of Change shows by what percentage the close is higher or lower today than a fixed number of candles ago. It shows you the speed and direction of a move, and when it is accelerating or losing steam.
Calculation
The Rate of Change is the percentage change of the close from the close as many candles back as the Length specifies. So the comparison is always with exactly one candle. The first value appears as soon as there is one more candle than the length specifies. Unlike classic momentum, which shows the difference between the two closes in price units, the Rate of Change is a percentage and so is comparable across symbols and price levels.
The pane shows the value as columns around the zero line: green at zero and above, red below. The legend gives it in percent, with its sign.
How to read it
- Above and below zero: Above zero, the price is higher than the comparison price; below zero, lower. A move across the zero line is a simple trend signal.
- Column height: When the columns grow, the move is accelerating. If they shrink while the price keeps rising, the pace is slowing. The price is still rising then, but more slowly than before.
- Divergences: A new price high with a smaller ROC high shows fading momentum, and the mirror image applies at a low.
- Extremes: Unusually high or low values compared with its own history show overextended moves. There are no fixed thresholds; they depend on the symbol and the interval.
Settings
| Setting | Default | Effect |
|---|---|---|
| Length | 12 | Distance in candles to the comparison price (1–100). Shorter reacts faster and fluctuates more. |
Limitations
- Base effect: The ROC depends as much on the comparison price as on the current price. When a strong candle drops out of the window, the value jumps even if the price is barely moving right now.
- It compares only two closes. It doesn't see what happened in between.