What is Fisher ROC?

The Fisher ROC transform is a mathematical transformation applied to time series data, often in financial markets, to identify potential price reversals. It converts the rate of change (ROC) of a price into a standardized, more Gaussian-like distribution. This makes it easier to identify extreme values, which may signal overbought or oversold conditions. Traders use Fisher ROC to generate buy or sell signals based on crossings of defined thresholds. Because of its Gaussian-like nature, standard deviations can be used more effectively to identify these thresholds.