Volume Rate of Change (VROC) is an indicator of the direction where the volume
trend moves. Its idea lies in the fact that almost all important graphical
formations (peaks, foundations, breaches, etc.) are accompanied by a dramatic
increase of trade volume. The indicator is the difference between current bar
volume and the volume n periods ago. If the current bar volume is higher than
it was n periods ago, the value of the indicator will be positive. If the
current volume is lower, VROC will obtain a negative value. Thus, the
indicator gives an idea of the volume change speed.
Determining the calculation period is very important while working with
this indicator. Short periods of 10-15 bars show sudden changes of volume.
However, for signals that are more realistic it is better to choose periods
of 25-30 bars. This gives a smoother and more rounded line and makes the
analysis easier. At the same time, using short periods gives a more broken, "noisy"
line and complicates the analysis.