Secret Swing Trading Indicator To Avoid Ranges | Choppiness Index Strategies


If you cannot tell whether a market is an
uptrend or downtrend on whatever time frame you are looking at, you will almost certainly
get chopped up if you trade it. Many traders make the mistake of swing trading
in all market condition but sometimes the markets are too choppy and erratic to trade
with any accuracy or effectiveness. The number one rule of successful swing trading
is taking positions in the direction of a primary trend, but not anytime, only when
the markets are moving and are not consolidating. In this video, you’ll discover a reliable
indicator you must pay attention to, if you want to swing trade with the momentum on your
side and avoid consolidating markets. Before we continue, if you are new to our
channel, make sure you subscribe, turn on the notifications and leave a like to show
your support. So, I’ve mentioned earlier about choppy
markets. I’m sure you know them very well. You enter a swing trading position and the
price action becomes range bound, and is moving sideways. No profits and the market just go up and down
for days, around your entry point. The Fact is 80% of the Time the Market is
Choppy and your job, as a trader is to find ways to identify when the market is trending
or not. One of the easiest ways to identify whether
the market is moving or ranging is by using the Choppiness Index. Choppiness Index is based on chaos theory
and fractal geometry. This indicator basically helps to identify
whether the market is choppy (meaning consolidating or trading sideways) or is trending. Unlike many other indicators, the Choppiness
Index is a directionless indicator. The value of Choppiness Index indicator ranges
between 0 and 100. A high reading in the Choppiness Index usually
happens when there is a significant consolidation in the price action. Here is how this simple indicator can help
you record better results when swing trading: Choppy: When the value of the indicator is
above 61.8, it means that the market is moving sideways, in a choppy (consolidating) manner. Usually, the trend continues to be sideways
as long as Choppiness index stays above 50 line. Pay attention to this example. Look at the Choppiness index reaching high
values and also look at the price action. Nothing but consolidation, sideways moves
and market indecision. So, the closer the value is to 100, the higher
the choppiness levels. Trending: When the value of the indicator
is below 38.2, it means that the market is trending. Usually, the stock remains trending as long
as Choppiness index stays below the mid 50 line. Let’s analyze another example. Observe that when the indicator shows lower
values, the market is moving nicely. So, the closer the value is to 0, the stronger
the market is trending. End of Trend: When the value of the indicator
is below 25, it could mean that the prevailing trend may come to an end very soon. Take this as a warning sign. This doesn’t mean that the price will reverse,
it may continue to move nicely, but you should take a closer look at price action and act
accordingly when potential reversals occur. Now, let’s see a couple of swing trading
techniques you can implement using the choppiness index. The first swing trading technique involves
buying or selling the Breakout after high Choppiness Index Readings. In swing trading, it is generally believed
that extended periods of consolidation (meaning sideways trading) are followed by an extended
period of trending (strong, directional movement) and vice versa. So, here is how you could trade this. When a stock is trending above the 61.8 level
for an extended period of time, this is a sign that the market is practically flat. A valid approach would be to wait for a fall
back below the 61.8 level to signal a trend inception. In this case, once the choppiness index fell
below that level, this coincided with a nice breakout, and the price rallied upwards. Take a look at this chart. We have the same pattern, but on the downside. Remember that the Choppiness index is non
directional, so high readings are traded the same for an uptrend or downtrend. Here the indicator breaks below the level,
after a prolonged period of choppiness, practically giving confirmation that the breakout was
valid. Another technique involving the Choppiness
index is riding the trend when the indicator shows values below 45. So, instead of using 2 levels, we focus on
just one. Basically, when the indicator’s line stays
below the 45 level for a long period, we look for swing opportunities in the direction of
the main trend. Don’t overcomplicate your trading, focus
on price action, support and resistance and maybe add a moving average for a better understanding
of the trend. So, in this chart, we have several buying
opportunities, when the Choppiness index is below 45 and the price is trading above the
moving average. Look how easy is to identify the trend using
this indicator. As long as the choppiness is at low levels,
your swing positions should be safe. Here are some short opportunities, as the
price is making consecutive lows and the choppiness index stays below 45. Also, the price stayed below the moving average,
confirming the downtrend. Remember to always have an exit plan, because
this indicator doesn’t provide the best exit signals. Another great way to swing trade with the
choppiness index is to combine it with volume. Where there is volume, there is likely something
to happen on the market. Volume is an important indicator that can
be used to confirm certain price movement. It is always positive to see increasing volume
when a stock is advancing. Likewise, it is good to see an increase in
volume during a breakout from a consolidation range. So, when we combine choppiness index with
the volume, we could have one of the strongest confirmation we need in order to take a trade. So, here we have a consolidation phase, with
sideways price action, relatively low volume and the high choppiness readings. Observe how the volume started to increase,
while the price was still in the range. Once the indicator’s line crossed below
the 61.8 level, the price broke the range moved upward. The volume confirmed the valid breakout, as
it increased gradually through the move. The same pattern here, but on the downside. Price action was indicating a range, low volume
which starts to increase once the price approaches the support line. The choppiness index at high levels. And the breakout, with the volume showing
increasing momentum. Remember that the Choppiness Index does not
predict future direction, it is simply a measure of current trend status. You could say that it also measures volatility,
but you cannot use it to take trades blindly. The Choppiness Index one of the best indicators
to evaluate the market, but price action, support and resistance and volume should be
your main focus. Analyze the market, determine the main trend,
have a defined action plan and after that confirm your bias with the choppiness index. The true strength in this indicator is best
displayed when used as a confirmation that a stock is starting to trend or breaking out. Now, if you enjoyed this type of content,
make sure you subscribe to our channel, turn on the notifications so you don’t miss future
uploads and leave us a like to show your support. Until next time.

72 thoughts on “Secret Swing Trading Indicator To Avoid Ranges | Choppiness Index Strategies

  1. I had no idea this indicator existed. Thanks and congrats for 10k!

  2. So clear explanation but it seems u r making things little difficult by using indicators and some of ur editing πŸ™‚

  3. Please give suggestions about when to enter to enter and exit in intraday Mr.Mindset

  4. If you learned something new, Subscribe & Like this video (it only takes 5 seconds but will help us a lot πŸ‘)
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  5. No sir it's too complicated … give another indicator best for intraday … Congratulations 10k Sub.
    Thanks & Good Luck.

  6. What should be the Time Frame for using Choppines Index in Day Trading.

  7. You and wysetrade are my favourite trading channels, both offering good value with killer animations. Nice to see you are growing fast!

  8. Hi Sir, thanks for sharing.
    Can i know, what the best Time Frame for trade forex (daily traders)?
    How tu know, when the trend market is START or FINISH? Can u give example video how to read trend, when/how the trend Start & when/how the trend Finish?
    Thanks Sir.
    From Malaysia subscriber.

  9. That's why I like this channel, I learn new things every video. Never heard of this indicator! πŸ†’

  10. can you please give a link where to get this chop indicator ? Thanks

  11. can you kindly give a link where to get this chop indicator please? Thank you.

  12. Can you show your win/losses how much you’ve earned etc so people know the stuff you’re saying isn’t just to get YouTube revenue?

    The fastest way to make $100 dollars is to teach someone how to make $100 dollars.

  13. Which indicator is more reliable to gauge trend strength?ADX or choppiness index? ADX<20 and choppiness index> 61.2 indicate sideways action. BTW where are you from? Germany?

  14. Hey Man First of all I LOVE YOU and Your Simplicity of explaining every concepts very clear and in effective manner.
    I want you to make videos on Pullback like how we can confirm the pullbacks and which are valid pullbacks and which are not. Please it will be great help!!
    Thanks again
    Love from INDIA
    ANSHUL BADJATYA

  15. Great stuff! I will check out your other videos! i just subbed and liked πŸ™‚

  16. what timeframe is suitable for choppiness index for swing trading ?

  17. This is the first time I encounter chop index.I will back test this tonight.thanks a lot

  18. Wow an amazing video. I love your style and this indicator is tremendously effective. I can't believe I have never seen it before.

  19. Hi, been following your channel for quite some time now. I just want to know if you have a simple trading technique suitable for crypto? And what particular technical tools can I use ,profitable in trading cryptos. BTW, i'm just 5 months into trading and still getting the hang of it. More power to your channel. Hope read this. Thanks

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  22. Instead of making several videos on different indicators ,could you first make "1 single video" in presenting all the indicators that you use (with priority) and show us your basic "set up" /PLAN consisting of all indicators that you use in a particular trade (all at one time) .If not everything then please the basic indicators that you use over and over while making a trade .Here you have given too many indicator which is creating a hell lot of confusion (which to use which to not?). πŸ€” That would be quite helpful provi . Also after that make some more videos on how PRICE ACTION works .By the way, the way you explain is simply awesome . Very simple to understand .πŸ˜πŸ˜€

  23. I am a novice forex trader, that have been using your site for understanding of all the acronyms and a deeper understanding of the tools. I say THANK YOU. Your channel has caused me to be profitable and more disciplined. I have had real results, which makes this channel a SUCCESS. Peace Out πŸ™‚

  24. Choppiness Index, what is the indicator and where it can be found ???

  25. do they have a indicator like this on Thinkor swim platform? i am searching with no luck

  26. Sir, If the Choppy Index is between 61 to 38, What market would it be ? As per your experience please

  27. Funny thing. I've been writing a software, and the only time it loses are in market consolidation periods. I tried using the Vertical Horizontal Filter to really not much aid, unless I was reading it wrongly. I decided to just trade it myself and avoid market consolidation, but this could help very much. Your videos are very informative. Thank you.

  28. Odd how even after studying a ton of TA books and what not i had no idea about this indicator! Combined with other indicators it can def put you in the direction of the trend! Love your channel! Keep up the good work

  29. This looks interesting I'd like to test, What are Mt4 variations sir? Can u make a video on one of them

  30. Good contents! Thank u! Surprised that I never heard of this indicator. What's the logic behind it ? How to calculate it ? I always build my own useful indicator using excel chart. Could u pls help me to understand the logic behind this indicator. Please. Thanks again.

  31. I use moving average of 50..is it is right…what your suggestions about moving average of what values????

  32. nice video i love the indicator Mr Alfred has always made that known to me as well to surprise i'm seeing here right now

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  34. First time i heard abt this… Will try next.. what will be best timeframe for intraday??

  35. Awesome! Thanks again for sharing with us all your knowledge and give us new tools for trading. Each time, I feel like a kid in a candy shop. πŸ™‚

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  37. I remember seeing this indicator on traderview. Thanks to this vid, it does serve a purpose. I have had issues getting into trades where the market is sideways.

  38. Clear, to the point and very valuable advise. True signs of a great mind! Thank you!!!

  39. Where can I find this indicator? I've searched and I can't find the one you are using. Please supply a link to the choppiness indicator that you are using. thanks.

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