Moving Average Rate Of Change

The Moving Average Rate Of Change indicator quantifies the momentum of a smoothed price average to help traders identify trend direction, velocity shifts, and potential exhaustion points.

Usage

The Moving Average Rate Of Change (MAROC) is primarily used as a trend-following oscillator. Because it calculates the rate of change on a Simple Moving Average (SMA) rather than raw price, it produces a smoother signal that filters out minor price fluctuations.

• Zero-Line Crossovers: When the indicator crosses above zero, it suggests that the underlying SMA has turned upward, signaling bullish momentum. Conversely, a cross below zero suggests the SMA has turned downward, signaling bearish momentum.
• Momentum Acceleration: The indicator line changes color based on its trajectory. A green line indicates that the current rate of change is higher than it was a specific number of bars ago (acceleration), while a red line indicates the rate of change is decelerating.
• Trend Strength: Higher peaks and lower valleys in the oscillator represent periods of aggressive trending. A flattening of the MAROC line toward zero often precedes a period of consolidation or a trend reversal.

Details

The Moving Average Rate Of Change is constructed by first calculating a Simple Moving Average (SMA) of the source price. The Rate of Change formula is then applied to the resulting SMA values rather than the closing price.

The formula used is: 100 * (SMA - SMA[n]) / SMA[n]

Where n is the ROC length. This implementation is based on original concepts by @IldarAkhmetgaleev. By applying the ROC to a smoothed average, the indicator reduces the "sawtooth" effect often found in standard momentum oscillators, providing a clearer view of the primary trend's velocity.

Settings

• SMA len: Sets the lookback period for the Simple Moving Average calculation. Larger values result in a smoother, more lagging indicator suitable for long-term trend analysis.
• ROC len: Determines the lookback period for the Rate of Change calculation. This defines the window over which the percentage change of the SMA is measured.

FAQ

How does MAROC differ from a standard Rate of Change (ROC) indicator? A standard ROC measures the percentage change in price directly, which can be volatile. MAROC measures the percentage change of a Moving Average, providing a filtered perspective on momentum that focuses on the broader trend.

What do the color changes signify? The color of the line changes based on whether the current MAROC value is greater or less than its value from the specified ROC length period. Green indicates increasing momentum, while red indicates decreasing momentum.

How can I access the Moving Average Rate Of Change indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.