What it is
ROC is one of the simplest momentum measures: it compares today's close with a close a set number of candles ago. Because it is in percent, you can compare it across markets with very different prices.
It has no fixed upper or lower limit. Extreme readings are judged against the indicator's own history on that market, which is why traders watch for readings far beyond its usual swings.
How it is calculated
ROC = (close minus the close 12 candles ago) / the close 12 candles ago x 100.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| length | 12 | 1 to 300 | How many candles back the comparison is made. Short lengths react to small swings; long lengths (such as 125 or 250 on daily charts) show long term momentum. |
How to read it
How to trade it
- 1
On a 15 minute US30 chart, trade with the trend of a 50 EMA.
- 2
Entry trigger: during a pullback in an uptrend, ROC dips below zero and then crosses back above it. Enter on that candle's close.
- 3
Stop below the pullback low, often 30 to 60 points on US30 at 15 minutes.
- 4
Target 2 times the stop; exit early if ROC crosses back below zero.
ROC crossing back below zero with price closing below the pullback low cancels the long.
On WickSpeak, ROC writes a plain-English reading on the live candle: how far price has moved in percent, whether momentum is building or fading, how to trade it and what would prove it wrong. In Playbook you can test: crosses above zero, crosses below zero, is above zero, is below zero, is rising, or is falling.
WickSpeak also has its own version, the WickSpeak Rate of change. The line is coloured by strength: faint when the reading is weak, glowing when it is strong, mint above its middle line (zero) and pink below it. A cross of the middle line is marked only once the candle has closed, so a marker never vanishes after you have seen it. A gold marker shows a stretched reading, meaning the strongest few percent of its own range or past a fixed level. Divergences between price and the oscillator are drawn on both the chart and the indicator, and a chip shows the same reading on a higher timeframe.
Best markets and timeframes
Works on gold, US30, NAS100 and forex on any timeframe. Short lengths suit intraday timing; long lengths on daily charts suit trend filters.
Common mistakes
- Treating a fixed ROC number as overbought across markets; compare with the market's own history.
- Taking every zero cross in a flat market.
- Using a very short length that turns on every candle.
Works well with
Questions traders ask
What is the difference between ROC and momentum?
Momentum shows the change in price points; ROC shows the same change in percent. ROC is easier to compare across markets.
What is a good ROC setting?
12 is a common default for short term charts. 9 and 14 are also common, and 125 or 250 on daily charts for long term trend.
What does a negative ROC mean?
Price is lower than it was the chosen number of candles ago. It shows downward momentum over that span.
Is ROC a leading indicator?
It is a momentum indicator, built from past prices, so it does not foretell moves. It can turn before a moving average does, because it reacts to the latest change.