Description
The Rate of Directional Change (RDOC) is a technical indicator that helps distinguish between market whipsaws and trends. RDOC uses ZigZagHighLow’s swing points to create a filter that smooths data and reduces false entry signals.
The RDOC ratio is calculated by averaging the sum of all swing points (upward and downward price segments within a given time period) over the specified length.
The results can be interpreted as follows:
- Higher values may correspond to whipsaw regions.
- Lower values may correspond to trending regions.
Input Parameters
| Parameter | Description |
|---|---|
length
|
The length used to calculate swing points. |
averagelength
|
The length of the average used to smooth data. |
tick reversal
|
Additional value in ticks that can be added to the minimum price change to increase the distance between swing points. |
Plots
| Plot | Description |
|---|---|
RDOC
|
The Rate of Directional Change plot. |
Further Reading
- "Improve Trading Performance With a Whipsaw Filter – Taming the Effects Of Whipsaw" by Richard Poster, PhD. Technical Analysis of Stocks & Commodities, March 2024.
Example*
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.
Past performance is no guarantee of future performance.