Charting and Studies User Guide - CQG.com

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Rate of Change (ROC)
This study plots the percentage change between a current price and a price that occurred a
user-specified number of periods/bars earlier. ROC is centered on zero; it is positive when Price
is above its prior value and negative when it is below.
Characteristics and Usage
ROC may simply be used to measure the percentage change of a market between two bars. As
its name suggests, ROC may be considered a measurement of the “slope” of the market.
ROC is similar to Momentum, since it is a direct measure of market movement. The advantage
of a percentage change calculation is that it is not sensitive to different price levels.
This provides for:
• A more accurate comparison between the market action of different commodities or
stocks.
• A more accurate comparison of market action at different times when the commodity or
stock was trading at a fundamentally different price level. This is particularly important
for stocks where a $1 point move on a $100 stock is 1% but a $1 move on a $10 dollar
stock is 10%.
ROC is often used as an oscillator-type study. Accordingly, users often define OB/OS conditions
to identify when the market has attained a significant move.
Selling an OB market or buying an OS market is effective in a trading range market but is likely
to result in large losses during a trending market; if the market trends the ROC may stabilize
indicating the market is continuing to move at a persistent rate. Traders may want to use an
additional condition or set of conditions to confirm a trading signal.
ROC is an unbounded study making OB/OS levels difficult to define.
Basic Studies