CHOP-O-METER - Multi-Factor Choppiness Detector

A composite indicator that quantifies market choppiness using four independent measurements, helping you identify when to trade trends vs. when to sit out or fade moves.

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HOW IT WORKS
The Chop-O-Meter combines four normalized components (each scaled 0-100) into a single weighted score:
1. Price Efficiency (Kaufman-style)
Measures how efficiently price moved from point A to B. If price travels far but nets little distance, efficiency is low = high chop.
2. Direction Change Frequency
Counts how often price direction flips within the lookback period. More flips = more chop.
3. Mean Reversion Intensity
Tracks how often price crosses its moving average. Frequent crosses indicate a ranging, choppy market.
4. ATR Expansion Ratio
Compares the sum of individual bar ranges to the total period range. High ratio means lots of movement within a tight overall range = chop.

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READING THE INDICATOR

Above 65 (Red Zone): High chop — avoid trend-following, consider mean-reversion or staying flat
Below 35 (Green Zone): Trending — momentum strategies more likely to succeed
35-65 (Orange): Transitional/uncertain regime

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SIGNALS
🔻 Green triangle (top): Chop breaking down — potential trend starting
🔺 Red triangle (bottom): Trend exhausting — chop may be returning

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SETTINGS

Lookback Period: Number of bars to analyze (default 20)
Component Weights: Adjust influence of each factor
Thresholds: Customize high/low chop boundaries
Show Components: Toggle individual factor plots for debugging

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USE CASES

Filter out trend trades when chop score is high
Reduce position size in choppy regimes
Switch between mean-reversion and momentum strategies
Identify regime transitions early

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ALERTS INCLUDED

Entering High Chop
Entering Trend
Chop Breaking Down