ROC question

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Old Jul 2, 2012, 6:28pm   #1
Joined Feb 2011
ROC question

Another beginner question I'm afraid, this time about rate of change.

I'm using a scanner to narrow down my stock picks and I'm trying to use ROC in two ways:

1) ROC (20) to find stocks that are at least 5% higher than 1 month ago

and

2) To find stocks that are outperforming the SPX by 5%, I find the ROC (5) for the SPX and then use the criteria ROC (5) > {SPX ROC (5)}

Am I using it correctly?

And is the ROC always positive i.e. increased by 5% as opposed to decreased?

Last edited by mcginty; Jul 2, 2012 at 6:34pm.
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Old Nov 11, 2012, 6:01pm   #2
Joined Jul 2005
Re: ROC question

Hi friend

ROC is an oscillator and it needs care to use it with one more confirmation indicator like price & ma(20 ma is ok).
If you are more interested please look for turtle trader,Michael J Carr,on how he uses ROC26,with bollinger bands on monthly charts. BBands narrow down before a big move but bbands cant give direction up or down. When using ROC26 and its bbands,ROC26 gives us direction and clarity.

Hope you try these small clues. I trade commodities like gold using above and make money regularly. My entry is not based on spot price.I use entry in a long situation at current price less 2 times ATR(10) or enter short at current price plus 2 times ATR(10). If my entry fails,I wait for anotherTHUS AVOIDING impulsive trade entries.
So far I found Jimberg formula one of the best on daily based swing trades.
regards
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Quote:
Originally Posted by mcginty View Post
Another beginner question I'm afraid, this time about rate of change.

I'm using a scanner to narrow down my stock picks and I'm trying to use ROC in two ways:

1) ROC (20) to find stocks that are at least 5% higher than 1 month ago

and

2) To find stocks that are outperforming the SPX by 5%, I find the ROC (5) for the SPX and then use the criteria ROC (5) > {SPX ROC (5)}

Am I using it correctly?

And is the ROC always positive i.e. increased by 5% as opposed to decreased?
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Old Nov 12, 2012, 3:06am   #3
Joined Oct 2012
Re: ROC question

Quote:
Originally Posted by mcginty View Post
Another beginner question I'm afraid, this time about rate of change.

I'm using a scanner to narrow down my stock picks and I'm trying to use ROC in two ways:

1) ROC (20) to find stocks that are at least 5% higher than 1 month ago

and

2) To find stocks that are outperforming the SPX by 5%, I find the ROC (5) for the SPX and then use the criteria ROC (5) > {SPX ROC (5)}

Am I using it correctly?

And is the ROC always positive i.e. increased by 5% as opposed to decreased?
1. 20-bar period settings on daily bars is 4 weeks which could be considered as one month. Therefore, filtering stocks by ROC(20) > 5% algorithm would be correct for your task.

2. If you use 5-bar period setting you are comparing 1-week performance (5 trading days). If this is what you want than 5-bar setting is OK. If you want to compare monthly performance you should use 20-bar period setting (under bars I assume days). The formula should be
for weekly
ROC (5) + 5% > {SPX ROC (5)}
for monthly
ROC (20) + 5% > {SPX ROC (20)}
you have to add 5% because you want stocks that outperform index by 5%

3. ROC (Rate of change) oscillates around zero and could be negative. See its description at
ROC
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