Rate of Change: the simplest momentum measure there is

What it measures

Rate of Change is the percentage difference between the current price and the price a fixed number of bars ago. There is no smoothing and nothing derived — it is a direct measurement.

Because the output is a percentage it is comparable across instruments at any price, which most momentum indicators are not. Comparing the twenty-period ROC of five coins is a legitimate ranking.

That simplicity is also its weakness: it reacts to a single old bar dropping out of the comparison exactly as strongly as to today.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   Take the price a fixed number of bars ago.

2. 2

   Subtract it from the current price.

3. 3

   Divide by the old price and multiply by one hundred.

Settings

Nine is a short-term setting and twelve to fourteen is common for a swing view. The lookback is the entire indicator — it defines what "momentum" means here, and there is no other parameter to adjust. Because the comparison is against a single bar rather than an average, changing it by one can move the reading noticeably when that bar happened to be an outlier.

How to read it

• Zero means price is unchanged over the lookback, not that momentum has stopped.
• The sign flipping is the event; the magnitude is a measure of how violent the period was.
• A spike caused by the reference bar ageing out looks identical to one caused by a real move — check what happened at the far end of the window before reading it.
• It is the natural input for relative-strength ranking across a universe, which is what the screener uses it for.
• Two instruments with the same ROC have moved the same percentage over the same span, which is the comparison almost no other momentum indicator supports.

Where it misleads

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