What is ROC (Rate of Change)?
Price momentum normalised over an N-period lookback — the simplest, most honest momentum measure.
Definition
Rate of Change = (price_now − price_n_periods_ago) ÷ price_n_periods_ago. Quoted as a percentage. Lookbacks vary: 5-period (short-term), 21-period (monthly), 252-period (annual). Normalised so it's comparable across instruments and horizons.
Why it matters for trading
- ROC is the rawest momentum signal. No smoothing, no lag. A 21-day ROC > +5% with positive RVOL is one of the most consistent persistence signals across asset classes.
- ROC z-scores (standardised across an instrument's own history) flag *unusual* moves better than absolute ROC. A +2% day for SPX is a 2-sigma event; +2% for AVAX is noise.
- Cross-asset ROC ranking gives you relative strength: when crude is +4% and copper is -1% on the same day, the macro driver (likely energy chokepoint) is identifiable from ROC alone.