A calibrated version of momentum, suited to comparing assets.
The short answer
- What is the Rate of Change indicator (ROC)?
- Rate of Change: relative change across n candles.
- When does ROC get it wrong?
- Extremely sensitive to the choice of window. See its reading now on platform symbols, at the latest daily close, in the "Reading now" table on this page. See its reading now →
Reading now
| Ticker | Value | Five sessions ago | Status |
|---|---|---|---|
| SPY | 1.81 | 0.74 | Above 0 |
| QQQ | 0.76 | 1.63 | Above 0 |
| IWM | −0.83 | −2.04 | Below 0 |
| DIA | 0.65 | −0.66 | Above 0 |
A description of where the number sits against its thresholds. It is not an entry or exit signal.
Indicator limit
Extremely sensitive to the choice of window.
Read it with
Bollinger Bands: a rise while the Bollinger band widens is a real move, not noise.
Answers: is momentum changing?
What it actually does
Rate of Change measures the price difference across a window as a percentage, not in dollars: how many percent price changed over N sessions. This normalizing sets it apart from the raw momentum indicator and makes it possible to compare a $5 stock with a $500 one.
Why normalizing changes everything
A $2 move in a $20 stock is a big event (10%). In a $1,000 stock it is nothing (0.2%). Percentages give the whole market one language, and they are the basis of relative strength ranking across tickers and sectors: who leads and who lags.
How it is read in practice
A zero cross says price has returned to where it was before the window. An extreme reading measures the strength of the move. Divergence against price exposes fading momentum. Its strongest use is comparison: ranking dozens of symbols by rate of change surfaces the market leaders in a second.
Hypothetical example
A scanner ranks eleven sector funds by 20-session rate of change: three above 6%, seven around zero and one at negative 4%. The picture is clear in one line. Interest is concentrated, not broad, which analysts call narrow breadth.
Where it errs and why
Sensitive to the starting point: an outlier jump twenty sessions ago distorts today's reading, then vanishes suddenly when it leaves the window, producing a "move" that did not happen today. And it says nothing about continuation.
Read it with
Read it with relative volume to tell whether the strength is backed or hollow. Add trend strength to classify the environment, and breadth, which says whether the whole market is joining in or a few names lead.
Where to see it on the platform
Market scanners rank with it across symbols and sectors, and the sector rotation dashboard builds its leadership and lag map on it.
