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Smoothed Rate of Change

Type

Momentum oscillator

Short introduction

The "Smoothed Rate of Change" ("SROC") indicator is a variant of the Rate of Change or the Momentum developed by Fred G. Schulman. It is based on the exponential MA (EMA - Exponential Moving Average) and helps identify market trends. The indicator is displayed in a separate chart.

Statement

The statement corresponds as far as possible to that of the momentum, with the difference that the signals come somewhat slower, but also somewhat more accurately.

Formula/calculation

SROC = (current EMA - previous EMA) รท (previous EMA) x 100

Signal line = MA of the SROC

The following MA variants can be used for smoothing via the parameters:

  • Simple MA (SMA) - Default setting
  • Exponential MA (EMA)
  • Weighted MA (WMA)

Interpretation

The interpretation of the SROC follows the rules of momentum. According to Fred G. Schulman, the search for divergences between the SROC and the price development is of particular interest. A negative signal is generated when the underlying is still climbing new highs, while the SROC is no longer climbing new highs. A positive signal is generated when the underlying is still forming new lows, while the SROC is no longer forming new lows.

Default setting


Example: Smoothed Rate of Change

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