AS Chakravarthy NCFM Hyderabad for Stock Market Technical Analysis : Volume Rate of Change
VOLUME RATE OF CHANGE - TREND INDICATOR IN TECHNICAL ANALYSIS.
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The Volume Rate of Change displays the ROC of the security's volume, rather than of its closing price measured identically to the price of ROC.
The Volume ROC shows the speed at which volume is changing. Additional information on the interpretation of volume trends can be found in the discussions on Volume and on the Volume Oscillator.TO KNOW OUR Stock Market Training Institute in Hyderabad Please Visit AS Chakravarthy NCFM Academy Hyderabad.
INTERFACE ON VOLUME RATE OF CHANGE
The Volume Rate of Change indicator might be used to confirm price moves or detect divergences. The formula for Volume Rate of Change as
[(Current Volume / Volume n periods ago) - 1] x 100
The Volume Rate of Change is calculated based on 14-periods for input n, but of course can be modified to any trader preferred period.
The V-ROC is an oscillator that concentrates on volume instead of price otherwise its design is identical to the Rate of Change Indicator. The V-ROC monitors and displays the rate at which volume changes. Expertise consensus agrees that this is a useful parameter to monitor because price reversals are normally accompanied by sharp increases in trading volumes.
V-ROC is helpful in identifying new bear and bull price channels by detecting trends in volume. The V-ROC fluctuates about a zero line producing larger readings when volume expands and lower ones when it contracts.
V-ROC can be used to identify overbought, oversold, market bottoms, Market tops and breakouts. This is because all these trading events are accompanied by rapid rate changes in volume. Investors also advised to confirm the findings of the V-ROC by using other suitable indicators as well as studying its recent historical data.
V-ROC is too sensitive. In contras,, if trader choose too long a period, then the V-ROC may not respond quickly enough to major price events such as reversals. After extensive research and from experience, most experts advise that the best time-period to use is the 25 to 30 day one.
The previous volume indicators, V-ROC can confirm price movements that have conviction and avoid buying or selling based on blips in the market that will soon be corrected, volume and the trends will follow. Investing wisely is essential.
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