Volume ROC (Rate of Change)

Technical Analysis, Studies, Indicators:

The Volume Rate of Change (Volume ROC) is identical to the ROC (Rate of Change) technical indicator that displays the percent difference between the current Volume and the volume n-time periods ago. The formula for calculating Volume ROC is

Volume ROC = (Volume - Volume N periods ago) / Volume N periods ago * 100

Similarly to the ROC, the Volume ROC is an oscillator that fluctuates above and below the zero line. When volume increases the Volume ROC moves up and when the price decreases the Volume ROC falls. The greater the change is in volume, the greater the change is in the Volume ROC.

High volume ROC may indicate volume surges and could used to define the overbought/oversold moments that could lead to the trend reversal.

It is a good practice to scroll the chart back in the recent past (several frames back) to see for connections between Volume ROC, volume surges and the price reversal and try to apply it to the current market.

It could be a good practice to use this indicator in conjunction with other price based technical indicators.

Chart 1: ROC (Rate of Change)



Technical Analysis Studies :

Volume ROC (Rate of Change) is mathmatically identical to Price ROC only it displays the ROC of the security's volume rather than of its closing price. The Volume ROC shows the speed at which volume is changing. This can be quite informative as almost every significant chart formation (tops, bottoms, breakouts, etc.) is accompanied by a sharp increase in volume.

The Volume ROC indicator is calculated by dividing the amount that volume has changed over the last n periods by the volume n periods ago. The result is the percentage that the volume has changed in the last n periods. When the volume is higher today than it was n periods ago, a positive number will result. If the volume is lower today than it was n periods ago, the ROC will be negative. This is written in formula form as:

(( Volume - Volume n periods ago)/Volume n periods ago ))