The Price Rate Of Change (or ROC-Price) indicates the speed of price variation.
This indicator is equal to the percentage change in closing prices over a given period relative
to the closing price at the beginning of the period.
The period to use can range from 1, for extremely volatile stocks, up to 200 for very long-term trading. Generally,
the most commonly used periods are from 12 to 25 days.
Calculation Method
where:
C: closing price of the last day
Cp: closing price of the first day of the given period
Example
Interpretation
In general, when the Price Rate Of Change is greater than zero, it is a sign that the speed of price variation
is positive and therefore the trend is bullish. Crossing the zero line upwards is considered a buy signal.
Conversely, crossing the zero line downwards is a sell signal because it means the trend is becoming bearish.
