Rate of Change (ROC)
ROC is an oscillator designed to measure the rate of price change.
ROC is defined as follows:
ROC = (CP - CPn) / CPn * 100
- CP is the latest closing price, and
- CPn is the closing price of n periods ago.
ROC only has one parameter, n, that specifies the number of periods over which the closing prices should be compared.
The ROC indicator used in different ways. Some use it follow the trend, others use it as an oscillator to identify overbought and oversold situations, and still others use it as a signal when the ROC crosses the 100 line.