Rate of Change
The Rate of Change function is a variation on the Momentum formula. ROC calculates the percentage difference between the day's closing stock price and the price from a specified number of time periods in the past. Applications of ROC include indication of price reversals. For example, if the price is trending upward while the ROC is moving downward, this may indicate a large drop in price is forthcoming.
The Rate of Change function requires the following input series:
- d0 - The set of data values for which the Rate of Change is calculated, usually the daily close price of a stock.
The Rate of Change function has the following parameters:
- s0 - Period - The number of time periods to use in the calculation. Default value is 5.
- Alignment (Optional) – Hierarchy placeholder to be used as the alignment axis.
The Rate of Change formula generates the following output:
- Rate of Change - The Rate of Change result set.