Rate of change (ROC) is a technical indicator of momentum that measures the percentage change in price from period to period. Rate of change is also referred to as “momentum” and is often used to confirm trends. For example, when a security reaches a new high but the rate of change does not, then there is a negative divergence between price and momentum.
The source code for the ROC function is available here.
/* The interpretation of the rate of change varies widely depending
* which software and/or books you are refering to.
*
* The following is the table of Rate-Of-Change implemented in TA-LIB:
* MOM = (price - prevPrice) [Momentum]
* ROC = ((price/prevPrice)-1)*100 [Rate of change]
* ROCP = (price-prevPrice)/prevPrice [Rate of change Percentage]
* ROCR = (price/prevPrice) [Rate of change ratio]
* ROCR100 = (price/prevPrice)*100 [Rate of change ratio 100 Scale]
*
* Here are the equivalent function in other software:
* TA-Lib | Tradestation | Metastock
* =================================================
* MOM | Momentum | ROC (Point)
* ROC | ROC | ROC (Percent)
* ROCP | PercentChange | -
* ROCR | - | -
* ROCR100 | - | MO
*
* The MOM function is the only one who is not normalized, and thus
* should be avoided for comparing different time serie of prices.
*
* ROC and ROCP are centered at zero and can have positive and negative
* value. Here are some equivalence:
* ROC = ROCP/100
* = ((price-prevPrice)/prevPrice)/100
* = ((price/prevPrice)-1)*100
*
* ROCR and ROCR100 are ratio respectively centered at 1 and 100 and are
* always positive values.
*/