Rate of Change (ROC)
In short
Percentage price change over N periods — measures momentum speed
ROC measures how fast a price is moving. If a stock was $100 ten days ago and is $110 today, its 10-day ROC is +10%. High ROC means strong momentum; a reading near zero means the move has stalled, and negative ROC means the price is falling versus that earlier point.
ROC compares the current closing price to the price N periods ago and expresses the difference as a percentage: (Close − Close[n periods ago]) ÷ Close[n periods ago] × 100. Unlike bounded oscillators such as RSI, ROC has no fixed ceiling or floor — its magnitude depends on the security's volatility and the lookback period, so there's no universal band for 'overbought' or 'oversold' the way there is for RSI. Practitioners instead watch the zero line (a cross from negative to positive flags a shift toward upward momentum) and divergences — price making a new high while ROC makes a lower high warns momentum is fading even as price keeps rising. ROC tends to whipsaw in choppy markets and is usually paired with a trend or volume indicator rather than used alone.
Formula
ROC = (Close - Close[n periods ago]) ÷ Close[n periods ago] × 100Related concepts
- RSI (Relative Strength Index) — RSI scores a stock from 0–100. Above 70 means it's been rising so fast it might be due for a pullback (overbought). Below 30 means it's fallen a lot and could bounce (oversold).
- MACD — MACD compares two moving averages to show momentum. When the fast line crosses above the slow line, it's a buy signal. Cross below = sell signal. Like two runners — when the faster one pulls ahead, momentum is shifting.
- ADX (Average Directional Index) — ADX tells you how strong a trend is on a scale of 0–100. Above 25 means there's a real trend happening. Below 20 means the market is choppy with no clear direction.