Rate of Change (ROC)

Overview

The Rate of Change (ROC) indicator represents momentum in its most fundamental form, measuring the rise (price change) over the run (time). While often calculated as a percentage using the formula [(Current Price - Price n Periods Ago) / Price n Periods Ago], ROC can also be expressed as the simple difference between prices. This flexibility makes ROC adaptable to various trading styles and analytical needs. As one of the earliest momentum oscillators from the 1940s, ROC has proven its enduring value by providing clear signals about the speed and direction of price movements.

The genius of ROC lies in its ability to reveal acceleration and deceleration in price trends before they become apparent in the price chart itself. When ROC expands into positive territory, it signals accelerating upward momentum; when it dives deeper negative, it indicates accelerating declines. This leading characteristic makes ROC particularly valuable for identifying potential trend reversals through divergences. The choice of period 'n' is crucial - shorter periods (7-10) create a sensitive oscillator for short-term trading, while longer periods (200-300) smooth out noise for long-term investment analysis.

Interpretation & Trading Signals

Example Usage

Code examples will be available once the Rust implementation is complete.