Volume Rate of Change

Definition

The volume rate of change indicator is a technique used to measure the volume of trades within bars, It compares the current volume of trades with a previous volume of trades measured certain amount of periods ago. The difference of periods used for the comparison of volume is usually of 14 periods.

Volume Rate of Change

Formula

Use

The volume rate of change analysis technique is of great use because it helps understand the strength of the price movements. It has the purpose of showing the amount of trades made within a bar to show how strong the price movement was. It is often used to detect price divergence or confirm price moves.

Possible Application

This indicator applied along with a trending indicator, such as moving averages or a linear regression curve, could be useful to observe the trend of a market as well as how sustained the current trend is. It would help avoid making decision when price changes are weak, and it would show when a strong price movement takes place to take advantage of it.

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