P
PipsGrowth

Key Takeaways

Difficulty:Beginner
Reliability:Moderate
Category:momentum
Timeframes:1H, 4H, Daily

Rate of Change (ROC)

momentumšŸ“Š 1H, 4H, Daily

Measures the percentage change in price over a specified period.

Formula

Code
ROC = ((Close - Close(n)) / Close(n)) Ɨ 100

Detailed Explanation

Rate of Change measures how fast price is changing as a percentage.

**Key Concepts:** - Positive ROC: Price higher than n periods ago - Negative ROC: Price lower than n periods ago - Magnitude shows momentum strength

Parameters

Period
Default: 12
ROC lookback period

šŸ“ˆ Bullish Signals

ROC crosses above zero, rising from oversold

šŸ“‰ Bearish Signals

ROC crosses below zero, falling from overbought

Python Implementation

ROC calculation

Python
import pandas_ta as ta
df['ROC'] = ta.roc(df['close'], length=12)

TradingView Pine Script

Try on TradingView
JavaScript
//@version=5
indicator("ROC")
roc = ta.roc(close, 12)
plot(roc, "ROC", color=color.blue)
hline(0, "Zero")
šŸ“Š Use TradingView for Advanced Charting
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MT5 MQL5 Code

C++
int roc_handle = iMomentum(_Symbol, _Period, 12, PRICE_CLOSE);
// Note: MT5 Momentum is similar to ROC

Python Libraries

pandas-ta
Technical analysis
pip install pandas-ta

Common Mistakes

āœ—Ignoring divergences
āœ—Using without trend context

Confirmation Signals

Price action
Volume
Moving averages

Best For

Momentum measurementDivergence tradingOverbought/oversold

šŸ’” Pro Tips

  • ā€¢Unbounded oscillator - no fixed limits
  • ā€¢Good for comparing momentum across instruments
  • ā€¢Divergences are reliable signals
Last updated: December 29, 2024

Educational Disclaimer

This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.

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Investopedia - Technical IndicatorsBabyPips - Technical IndicatorsMetaTrader 5 Docs

Frequently Asked Questions

Related Indicators

Relative Strength Index (RSI)

RSI measures the speed and magnitude of price changes, oscillating between 0-100 to identify overbought and oversold conditions.

Momentum Indicator

Measures the rate of price change by comparing current price to price n periods ago.

TRIX (Triple Exponential Average)

Triple-smoothed EMA rate of change that filters out insignificant price movements.

Back to All Indicators