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Registered User
Joined: 10/7/2004
Posts: 40
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Rate of Change is defined (in the help section) as:
"The rate of change measures changes as a running difference rather than actual points. The latest plot is calculated as the current indicator value less the indicator’s value a certain number of periods ago."
To see how this worked, I placed MACD (12, 26, period of 1)in the upper window.
I placed an ROC (1 bar period) on MACD to see how it worked.
I got the pointer and its associated data box in the upper left corner.
I noticed that when the MACD values did not change, ROC values would be zero (which is correct), but the ROC chart would zig zag.
Also, when MACD values were changeing positively, the ROC values would be changing positevily, but its chart would be declining instead of going up.
Can someone explain why the ROC chart does not behave according to the changes in its values. Am I missing something?
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Registered User
Joined: 9/17/2005
Posts: 57
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i am guessing on this. regarding the positive changes: the macd may be increasing at a slower rate.
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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A value small enough to cause a significant change in the charts might not be large enough to display in the Data Box since it rounds values to two digits past the decimal point.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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Registered User
Joined: 10/7/2004
Posts: 40
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Thank you for your replies.
My conern is that if the ROC values are positive, then its chart should show an up move.If the ROC values are zero, then its chart should show a sideways move. And if the ROC values are negative, then its chart should show a down move. But sometimes it shows the opposite, which can be misleading on the chart.
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Registered User
Joined: 10/7/2004
Posts: 40
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I like to carify. By positive I mean if the ROC value is positive and increasing, its chart should be shown rising. By negative I mean if the ROC value is negative and decreasing, its chart should be shown falling.
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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I am confused.
The ROC will only rise if the MACD move today is higher than its move yesterday. Remember it is only plotting the comparison of 2 points. It has no memory of its previous plot. It is not cumulative.
Example:
MACD 2 days ago: 15
MACD yesterday: 25
MACD today: 26
The MACD was up but not by as much as before. The ROC will be lower today than yesterday.
Are you not seeing this playing out on your charts?
If not, can you give me a ticker and dates?
- Craig
Here to Help!
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Registered User
Joined: 9/17/2005
Posts: 57
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but the rate of 15 to 25 is less than the rate of 25 to 26; thus, a lower rate i.e. lower ROC.
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Registered User
Joined: 9/17/2005
Posts: 57
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whoops. 15 to 25 is greater than 25 to 26 thus 25 to 26 is a slowdown but still an increase.
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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...and it will appear as a ROC above 0 but less than the ROC of the previous day.
- Craig
Here to Help!
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Registered User
Joined: 10/7/2004
Posts: 40
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Thank you for your replies. I think my confusion was in that it is not cumulative and therefore does not show any trend. If the current ROC value is greater than the previous value, the chart will rise. It seems each current value in ROC relates to only the previous value and not necessarily to earlier values. Maybe that is why it zig zags so much.
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Registered User
Joined: 9/17/2005
Posts: 57
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maybe.
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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ROC values relate to nothing before it. Each plot is discreet.
- Craig
Here to Help!
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Registered User
Joined: 1/1/2005
Posts: 2,645
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QUOTE (MarketReader) If the current ROC value is greater than the previous value, the chart will rise.
If by that statement you mean:
"If the current ROC value is greater than the previous value, the Indicator to which the ROC is applied will rise."
then the statement is not true.
The following statement is true:
"The current ROC value is positive if and only if the Indicator to which it is applied rises."
Notice that if the ROC decreases but still remains positive, the Indicator rises. If the ROC increases but still remains negative, the Indicator falls.
Thanks,
Jim Murphy
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