Measure price momentum as a percentage change over a defined lookback period.
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Overview
The Rate of Change (ROC) indicator measures the percentage change in price between the current period and a specified number of periods ago. It is one of the purest expressions of price momentum — directly answering the question: "How much has this asset moved in the last N periods?"
Formula: ROC = ((Current Close − Close N Periods Ago) ÷ Close N Periods Ago) × 100
ROC oscillates around zero. A positive ROC indicates prices are higher than N periods ago (upward momentum); a negative ROC indicates prices are lower (downward momentum). The magnitude indicates the speed of the move: a ROC of +20% means price is 20% higher than it was N periods ago, indicating strong momentum.
Common applications include: overbought/oversold signals (ROC reaching extreme positive values often precedes a pullback), divergence analysis (price making new highs while ROC makes lower highs signals weakening momentum), and zero-line crossovers as trend change signals.
ROC is mathematically equivalent to Momentum (price difference rather than percentage difference), and is closely related to the 12-period minus 26-period EMA difference that underlies MACD. For cross-asset momentum strategies, ROC is the preferred metric for ranking assets by their relative return over a standard lookback period.
Strategy Code
This is a TradingView Pine Script example for this indicator. Paste it into the TradingView Pine Editor, add it to your chart, and adjust inputs for your market and timeframe.
//@version=6
strategy("Rate of Change (ROC)", overlay=true)
fastLen = input.int(20, "Fast Length")
slowLen = input.int(50, "Slow Length")
fast = ta.ema(close, fastLen)This is a thinkorswim ThinkScript example for this indicator. Open thinkorswim, create a custom study, paste the script, and apply it to your chart.
input length = 12;
def roc = RateOfChange(length = length);
def buySignal = roc crosses above 0;
def sellSignal = roc crosses below 0;
AddOrder(OrderType.BUY_AUTO, buySignal, close, 1, Color.GREEN, Color.GREEN, "ROC Buy");Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
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