Rate of Change
The percentage change in price over a fixed number of periods.
Formula
ROC = (Current Close - Close n periods ago) / Close n periods ago x 100
Unit
%
In depth
Rate of change is the simplest momentum measure and among the most honest, because it is a plain percentage with no smoothing constants or arbitrary scaling. Its one subtlety is that it compares only two points and ignores everything in between, so a violent round trip and a steady drift can produce identical readings. It is unbounded, and because it is a percentage it is comparable across securities, which most indicators in this category are not. Academic momentum studies typically use exactly this measure over 6 to 12 months, which is a documented effect rather than a claim made by this dictionary.
Worked example
Close today ₹504 against ₹480 twelve periods ago gives ROC = (504 - 480) / 480 x 100 = 5%. The identical 5% would result whether the path was a steady climb or a fall to ₹430 and back.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Rate of Change” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.