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Forex Indicator ROC

The Rate of Change (ROC) indicator calculates how price has changed within a specified number of time periods by calculating the difference between the current bar's price and the price a selected number of bars ago. The difference is calculated in "Points" or as a "Percentage". The ROC moves in a wave-like fashion (similar to that of price), but it oscillates above and below an equilibrium level set at zero. The ROC rises as prices rise; the ROC declines as prices decline. The greater the change in prices, the greater the change in the ROC indicator.

To calculate the ROC in Points:

ROCPoints = Today's Price - Price n-Periods Ago

To calculate the ROC as a Percentage:

ROCPercentage = ((Today's Price - Price n-Periods Ago) / Price n-Periods Ago) * 100

Interpretation

The ROC indicator is a simple indicator capable of producing a myriad of buy and sell signals. However, there are four basic methods of interpreting the ROC indicator:

Zero-Level Crossovers: A buy signal occurs when the ROC crosses above zero and a sell signal occurs when the ROC crosses below zero.

 

Trading spot currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. 

 

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