What is the rate of change oscillator?

Wall Street Journal . Swing Trading, A Scientific Approach

The Rate of change is an indicator that gives off buy, and sell signals based on a mathematical formula. It is uses price to try and determine what will happen to a given stock.

Below is the formula for this oscillator.

Rate of change = (Today’s close)- (close of x number of days ago)/ (close of x many days ago)

The oscillator sits on your chart. When it passes below $0 that is a sign that the stock will most likely start heading down and you may want to sell or short. The opposite is also true. When the indicator passes above $0 it is said to be a buy signal.
This can sometimes give you false signals, which is why it should be combined with other indicators to weed out false signals.

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