S-RoC Indicator: Oscillator by Alexander Elder
S-RoC indicator is a Smoothed Rate of Change indicator. Its principle is described in Alexander Elder's book "How to Play and Win at the Stock Exchange".
The S-RoC indicator calculates the exponential moving average EMA by Close prices, and then determines the speed of its change. The results are displayed in the basement part of the chart and represent a continuous line oscillating along the zero level.
How to use the S-RoC indicator in trading
Since this is an oscillator, the rules of trading with oscillators apply to the S-RoC indicator:
- If the indicator, being below the zero line, turns up from the trough - buy;
- If the indicator, being above the zero line, turns down from the peak - sell;
- divergence (divergence) between the values of the oscillator and the price gives a particularly significant signal, open a trade in the direction of the indicator.
Although Alexander Elder recommended using the 13/21 parameters (for medium- and long-term trading on the stock market), it is advisable to optimize S-RoC indicator before applying for short-term periods.
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