OPEN-SOURCE SCRIPT
Updated RoC Momentum Cycle
RoC Momentum Cycles (RMC) is derived from RoC (Rate of Change) indicator.
Motivation behind RMC: Addressing RoC’s Shortcomings
While the Rate of Change (RoC) indicator is a valuable tool for assessing momentum, it has notable limitations that traders must be aware of. One of the primary challenges with the traditional RoC is its sensitivity to price fluctuations, which can lead to false signals in volatile markets. This often results in premature entries or exits, impacting trading performance.
By smoothing out the RoC calculations and focusing on more consistent signal generation (using SMA on smoothed RoC), RMC offers a more consistent representation of price trends.
Momentum Cycles
RMC helps visualize momentum cycles in a much better way compared to RoC.
Motivation behind RMC: Addressing RoC’s Shortcomings
While the Rate of Change (RoC) indicator is a valuable tool for assessing momentum, it has notable limitations that traders must be aware of. One of the primary challenges with the traditional RoC is its sensitivity to price fluctuations, which can lead to false signals in volatile markets. This often results in premature entries or exits, impacting trading performance.
By smoothing out the RoC calculations and focusing on more consistent signal generation (using SMA on smoothed RoC), RMC offers a more consistent representation of price trends.
Momentum Cycles
RMC helps visualize momentum cycles in a much better way compared to RoC.
- Long Momentum Cycle: A cross-over of smoothed RoC (blue line) above averaged signal (orange line) below zero marks start of a new potential upside cycle which ends when the blue line comes back to zero line from above.
- Short Momentum Cycle: A cross-under of blue line below orange line above zero marks beginning of a potential downside cycle which ends when the blue line comes back to zero from below.
Release Notes
Updated with annotated chart and fixed a typo in script.Release Notes
Added histogram to the indicator. Enabled by default but can be disabled from the style section under indicator settings.Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Be a Better Trader!
Disclaimer: Do your own due diligence for buy/sell decisions.
Disclaimer: Do your own due diligence for buy/sell decisions.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Be a Better Trader!
Disclaimer: Do your own due diligence for buy/sell decisions.
Disclaimer: Do your own due diligence for buy/sell decisions.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.