What is CHOP?
The Choppiness Index adds up the true range of every bar in a 14-bar window and compares that total with the distance between the window's highest high and lowest low. If price went back and forth, the bars' ranges add up to far more than the window's own range and the reading is high, towards 100. If price went mostly one way, the two are similar and the reading falls towards 0.
CHOP tells you whether the market has been ranging or trending. It does not tell you which way: a low reading means a strong move without saying whether it was up or down. It also does not predict when a range will break.
How to use CHOP
- High readings. Values towards the top of the scale mean price has been moving back and forth inside the window, typical of a range or consolidation.
- Low readings. Values towards the bottom mean the bars have been stacking in one direction, typical of a trend. Check the chart for the direction.
- Changes in the reading. A falling CHOP after a long stretch of high readings means price has started to travel rather than oscillate. A rising CHOP during a trend means the move is becoming more two-sided.
- No fixed thresholds. The indicator draws no levels. Many traders mark bands such as 61.8 and 38.2, but those are a convention, not part of the calculation.
These are ways to read the line, not entry signals on their own.
Settings
| Setting | Default | What it changes |
|---|---|---|
| Length | 14 | Bars in the window. Lower reacts to shorter bursts of trend or chop; higher describes a longer stretch and moves more slowly. Minimum 1. |
Adjust the length in the indicator settings.
Calculation
The total of the bars' true ranges is divided by the window's overall range, and the logarithm of that ratio is scaled to the window length:
TR = max(high - low, |high - previous close|, |low - previous close|)
ratio = sum(TR, 14) / (highest high over 14 - lowest low over 14)
CHOP = 100 * log10(ratio) / log10(14)Dividing by log10 of the length keeps the scale comparable when you change the length. If price moved straight from one end of the window to the other, the ratio is close to 1 and CHOP is close to 0. The more the bars overlap, the higher the ratio and the reading.
On the first bar there is no previous close, so its true range is taken as high minus low. The sum and the highest and lowest values all fill at the same time, and the first reading appears on the fourteenth bar of loaded history. No reference levels are drawn.
Limitations
- It has no direction. A low reading can be a strong rally or a strong sell-off. It has to be read together with price or a directional indicator.
- It lags. It describes the last 14 bars. By the time it shows a trend, part of the move has already happened.
- Thresholds are convention. Levels such as 61.8 and 38.2 are widely quoted, but nothing in the calculation makes them special, and what counts as choppy differs between markets and timeframes.
- Bars leave the window abruptly. A single large bar can change the window's high or low and then drop out 14 bars later, moving the reading sharply.
- The live candle moves. The current bar's range changes until it closes, so the latest value moves too.
Frequently asked questions
The Choppiness Index is a 0 to 100 measure of whether price has been ranging or trending over a window. It compares the total of the bars' true ranges with the distance from the window's highest high to its lowest low. High values mean choppy, overlapping bars; low values mean price has travelled in one direction.
High values describe a range and low values describe a trend, without saying which way. Many traders treat a drop from high readings as a sign a range is ending and look at price or a directional indicator for the direction. The indicator itself draws no threshold lines.
Yes. The indicator declares one input, Length, default 14 with a minimum of 1, which sets the window. Open the indicator's settings on the chart to change it.
No. A low reading means price has moved mostly in one direction over the window, which could be up or down. Pair it with price itself or with an indicator such as [ADX](/library/indicator/adx) and its directional lines to see the direction.
No. Closed bars are not revised. The current bar's value moves while that bar is live and settles when it closes.
Use the Add to chart button at the top of this page. It opens BTC/USDT on Binance in the Altrady Charts terminal with the built-in Choppiness Index already applied. On any other market, open the indicator picker on the chart and choose Choppiness Index from the Trend group.