Rate of Change (Volume)

Rate of Change Volume (ROCV) is an oscillator applied to volume rather than price and is calculated in the same manner as the Rate of Change (Price) indicator.

ROCV highlights increases in volume, which normally occur at most significant market tops, bottoms and breakouts.

Example

Procter and Gamble Corporation plotted with  5 day Rate of Change (Volume).

Observe the major spikes in volume:

  1. On entry into the trading range.
     
  2. When price makes a new peak during the range.
     
  3. On an upward breakout from the range.

Construction

First, decide on the number of periods (n) over which to calculate the indicator. This will depend on the time frame that you are analyzing.

Then calculate the Rate of Change (Volume) formula:

                    ( Volume [today] - Volume [n days ago] ) / Volume [n days ago]

Setup

See Indicator Panel for directions on how to set up an indicator. 

The default ROC window is 12 days. To alter the default settings - Edit Indicator Settings.

Related Topics

Rate Of Change (Price)

A refinement of Momentum - Rate of Change is designed to fluctuate as a percentage around the zero line...


Volume Patterns

Volume activity provides powerful confirmation of price signals and often gives advance warning of...

External Links

Technical Analysis from A to Z
 

Volume Rate of Change - Steve Achelis' best-selling book, Technical Analysis from A to Z