ROC (Rate of Change): calculation and reading
ROC is the percentage change of today’s close relative to the close N days ago.
Updated：
Loading chart…
Uses the prices of TSMC (2330) over roughly the last 120 trading days only to show how this indicator is drawn; it is not a stock recommendation. Source: Taiwan Stock Exchange.
Calculation
ROC = (today’s close − close N days ago) ÷ close N days ago × 100 (%), with a default N = 10.
It is the percentage version of MTM, divided by the close N days ago, so stocks with different price levels can be compared side by side.
How to read it
- Greater than 0: higher than N days ago; less than 0: lower than N days ago; the zero axis is the dividing line.
- The shorter the period, the more the value swings; the longer the period, the better it reflects medium-term change.
Limits
ROC uses the closing prices at only two points in time, so the path in between does not affect the result; if the price N days ago happened to be unusual, it also affects today’s value. It describes change that has already happened and does not predict the future. Use adjusted prices for the calculation.
This article only explains the calculation and how to read a chart. It is not investment advice.
See it on this site
Citing and copyright
This article is original content of “Tenmizu FinTech”. You are welcome to cite it; please credit the source and link to this page. Concepts or data that come from others are credited under “Sources”; their copyright belongs to the original authors.