what is rate of change roc 
the rate of change roc is the speed at which a variable changes over a specific period of time roc is often used when speaking about momentum and it can generally be expressed as a ratio between a change in one variable relative to a corresponding change in another graphically the rate of change is represented by the slope of a line the roc is often illustrated by the greek letter delta understanding the rate of change roc the rate of change is used to mathematically describe the percentage change in value over a defined period of time and it represents the momentum of a variable it is used in a variety of mathematical and scientific situations for example finding a change in distance over time it can also be used in finance and investing to describe the change in the value of something over time such as a market index or individual security the rate of change is an important financial concept because it allows investors to spot security momentum and other trends for example a security with high momentum or one that has a positive roc normally outperforms the market in the short term conversely a security is more likely to decline if it has a roc that falls below its moving average or one that has a low or negative roc in this case the rate of change could be seen as a sell signal to investors the rate of change is also a good indicator of market bubbles even though momentum is good and traders look for securities with a positive roc if a broad market etf index or mutual fund has a sharp increase in its roc in the short term it may be a sign that the market is unsustainable if the rate of change of an index or other broad market security is over 50 investors should be wary of a bubble traders also can pay close attention to the speed at which one price changes relative to another for example options traders study the relationship between the rate of change in the price of an option relative to a small change in the price of the underlying asset known as an option s delta options traders use rate of change in various risk metrics known as the greeks the gamma for example is the rate of change of the delta where the delta is how the option s price changes with movements in the underlying 