Choppiness Index

Choppiness Index

The Choppiness Index is a non-directional indicator designed to determine if the market is choppy (trading sideways) or not choppy (trading within a trend in either direction). It is an oscillating indicator between -50 (very trendy) and +50 (very choppy).

There are many strategies for trading using the Choppiness Indicator:

1. Buy or sell the breakout rebounding from extreme Choppiness Index values

• When CI moves below +11.8 (choppy to trendy) after rebounding from a high CI value, this may indicate upcoming trend. Look for confirmation of direction in the price
• For a more conservative trade, wait until the CI moves past 0 (shown in screenshot)

2. Ride the trend with the Choppiness Index (when to exit, and when not to)

• If the price is trending but the CI has not reached above the +11.8 threshold more than three times, then the trade is likely to continue. If CI crosses +11.8 three times or more, then the trend is likely to stop

3. Refine your trading strategy's performance by confirming current market conditions BEFORE entering a trade. Many trading strategies perform best under specific market conditions. Quantitatively pick your desired amount of choppiness/trendiness using the CI.

Additional Details

• Thresholds are commonly used with the Choppiness Index to determine choppy versus trendy movements. Common values are popular Fibonacci Retracements: +11.8 for the high (choppy) threshold and -11.8 for the low (trendy) threshold
• The Choppiness Index pairs well with trend lines and traditional pattern recognition

Alerts

Email, message, and sound alerts can be turned on/off for the following events. Please note that email recipient and SMTP information should be specified in MetaTrader 4/options before using email alerts.

• Choppiness Index is crossing 0
• Choppiness Index is above user-selectable upper (choppy) threshold (Default=11.8)
• Choppiness Index is below user-selectable lower (trendy) threshold (Default=-11.8)

Parameters

• CHOP period (Default=14): number of bars used for indicator calculations
• CHOP smoothing (Default=1): optional smoothing period applied to Choppiness Index. 1=no smoothing, >1 = increased smoothing (using this value as smoothing period)
• Plot circles when CI > upper threshold: True = crossovers are highlighted by circles
• Plot circles when CI < lower threshold: True = crossovers are highlighted by circles
• Plot circles when CI crosses zero: True = crossovers are highlighted by circles
• Turn on/off all alerts: True = alerts are allowed, false = all alerts are paused
• Alert when CI crosses 0: If true, alerts when Choppiness Index value crosses 0
• Alert when CI is above upper threshold: If true, alerts when Choppiness Index value is above user-defined upper (choppy) threshold
• Upper alert threshold (Default=11.8): User-defined upper alert threshold
• Alert when CI is below lower threshold: If true, alerts when Choppiness Index value is below user-defined lower (trendy) threshold
• Lower alert threshold (Default=-11.8): User-defined lower alert threshold
• Turn on alerts message: Message box alert
• Turn on alerts sound: Sound alert
• Turn on alerts email: Email alert