The Rate of Change ROC indicator for MT4 calculates the rate of price change between the current closing price and the closing price before “n” periods. The indicator generates Bullish and Bearish trend change signals, which forex traders can use to place BUY or SELL trades.
|Indicator Title||ROC Indicator|
|Indicator Size||15.5 KB|
|Trading Platform||Metatrader 4|
How does the ROC Indicator work?
The ROC indicator generates forex trading signals based on divergence and convergence. Furthermore, based on the oscillator’s overbought and oversold conditions, forex traders can predict reversals and exit early.
This indicator reflects price momentum and assists traders in interpreting oscillator values and trading signals in a variety of ways. As a result, the indicator is extremely useful for new forex traders in identifying entry and exit points.
However, advanced forex traders can use convergence and divergence techniques, as well as plot support and resistance on the indicator, to trade complex technical trading strategies. Because the indicator lacks an upper and lower value limit, advanced traders must exercise caution when using the oversold and overbought conditions. Furthermore, the indicator is free to download and simple to install.
Trading with ROC Indicator MT4
The indicator’s zero-line crossover is the primary method for detecting trading signals. If the oscillator crosses the zero line from down to up, the price trend is BULLISH.
Forex traders can enter a BUY position with a stop loss that is lower than the previous swing low. The best profit-taking strategy is to follow the oscillator and stay long as long as the indicator is above the zero line.
If the oscillator falls below zero, it indicates a BEARISH market trend. Traders can place a SELL order with a stop above the previous swing high.
If the oscillator rises sharply above the zero line, this indicates a strong BULLISH market trend; conversely, a sharp drop below the zero line indicates a stronger BEARISH market trend.
The next critical step is to identify price and indicator divergence and convergence. Divergence or convergence reveals that the values of the ROC indicator and the price do not agree. Therefore, forex traders can buy and sell in accordance with the BULLISH or BEARISH divergence trading strategies.
The third approach involves plotting Support and Resistance, which are the cornerstones of technical analysis. Forex traders can use the indicator to draw channels and support and resistance lines. Technical forex traders can trade breakouts when they coincide with price movement.
The ROC indicator for MT4 allows you to trade the trading signals in a number of ways. However, traders should exercise caution when using the indicator’s forex trading signals. Only the closing price’s rate of change is used in the calculations. As a result, there is some lag in both the bullish and bearish trading signals. In order to trade with confluence and other technical indicators, forex traders should do so.Download indicator