Rate of change
How far the close has moved over the last N bars, as a fraction: 0.01 means +1%.
Rate of change divides the current close by the close N bars earlier and subtracts 1. The result is a fraction, not a percent: 0.005 means the close is 0.5% above where it was N bars ago. The first N bars of each run stay empty because there is no earlier close to compare with yet.
How to read it
- The line sits in its own pane below the price, centred on zero.
- Above zero, the close is higher than N bars ago; below zero, it is lower.
- At default settings the middle 90% of readings sit within about ±0.09%, so the line stays close to zero most of the time.
- Turns in the line show when the pace of the move changes, which can come before the price turns.
What it outputs
- Rate of change
- Fractional change of the close over the period: the current close divided by the close N bars ago, minus 1.
Settings
- Period
- How many bars back the comparison close is. Raising it measures the change over a longer stretch, so the line swings wider and reacts more slowly; lowering it reacts to each minute and looks noisier.
Pitfalls
- The value is a fraction, not a percent: read 0.001 as +0.1%, and 0.01 as +1%.
- Only the two endpoints count: a spike in the middle of the window, or a reversal that returns to the same close, leaves the reading unchanged.
- At default settings the median reading on SPY is exactly 0.0, so flat readings are common; a zero means the close matched the close N bars ago, not that the market stopped.