RATE OF CHANGE (ROC)
As per stock charts, “ROC is a pure momentum oscillator that measures the percent change in price from one period to the next. The Rate-of-Change indicator is momentum in its purest form. It measures the percentage increase or decrease in price over a given period of time. Think of it as the rise (price change) over the run (time). In general, prices are rising as long as the Rate-of-Change remains positive. Conversely, prices are falling when the Rate-of-Change is negative. ROC expands into positive territory as an advance accelerates. ROC dives deeper into negative territory as a decline accelerates.”
Since i don’t like ignorance or yung “basta ganyan yan” let us understand what ROC is sa pinaka basic na level. Here is the formula.
To simplify the formula its price nya ngayon minus price nya noon (depende how many days ang nilagay mo but default sa chart is 9) divided by price nya noon (depende how many days nilagay mo but default sa chart is 9) multiplied by 100. I will show you step by step sa chart.
Default nya sa chart is 9 meaning mula sa current price babalik ka 9 days at yun ang e cocompare mo na price.
16.5 ang price nya today while 16.85 naman ang price nya 9 days ago. If we use the formula it would be:
16.5 – 16.85 = -0.35
-0.35/16.85 = -0.02077151335
-0.02077151335 x 100 = -2.07
Sobrang simple di ba? So now na alam na ninyo ang formula paano nakukuha ang ROC punta tayo sa ano ang gamit nito. Ano nga ba? Anything na below zero line tawag dun bearish. Anything na above zero line tawag dun bullish at neutral naman sa zero line.
It tells us kung saan ang price today compared nine days go. If above zero line meaning mas mataas sya today compared noon. If below naman meaning mataas sya 9 days ago compared today.
How to use ROC? Una, isang tingin lang alam mo agad if mataas o mababa ang price today kesa noon. Napapalitan naman ang number of days depende sa gusto mo but default is 9.
Pangalawa, Divergence. Sa di pa alam ang divergence kindly read this muna or watch the video about divergence here.
Ang ROC ang masasabi ko na purest form of divergence kasi if you think about it the price now is being compared sa price few days ago so if may konting pagtaas ang price recently ipapakita agad ni ROC yun kahit gaano ka konti ang pag angat sa price. Sa chart ang makikita mo lang sa candles ay nagrange sya pero ky ROC makikita mo umaangat sya so may divergence. walang other factor kundi price lang. Let me show you an example.
Thats what ROC is. I will go through all of the indicators na nasa chart nyo. I will explain them one by one. I will tell you paano sila nacocompute at paano sila ginagamit. All of these technical indicators uses simple math lang naman. RSI na ang pinaka complicated na math sa mga TA indicators. If you want to learn more about RSI. Click here. Gagawin ko na simple lahat. I want to help you all learn for free. I want e remove ang ignorance. All my blog post nasa PSE ang set up since sa PSE ako nagtitrade.
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