CHOP Filter (ADX + Choppiness Index) CHOP Filter (ADX + Choppiness Index Hybrid Indicator)
This indicator is designed to improve decision-making by filtering out choppy environments that traditional ADX-based systems may still misinterpret as valid trends. It is best used to filter and confirm your usual entry signals from other indicators or strategies, improving their probability of success.
Green → Strong trend (ADX above threshold + low choppiness → clean trending conditions)
Yellow → Strong ADX but high choppiness (possible unstable or transitional trend)
Red → Weak trend / ranging market (low ADX + high choppiness index)
The CHOP Filter is a custom volatility and trend-strength indicator that combines the Average Directional Index (ADX) with a simplified Choppiness Index (CHOP) logic to better distinguish between trending and ranging market conditions.
This hybrid approach was developed after observing a common issue in trading: even when the ADX shows relatively strong values, the market can remains choppy and produce unreliable trend signals. On the other hand, using the Choppiness Index alone was not sufficient either, as it does not consistently confirm actionable trend strength. By combining both concepts, this indicator aims to provide a more reliable market filter.
The indicator is based on two well-known tools:
The ADX (Average Directional Index) was originally developed by J. Welles Wilder to measure trend strength.
The Choppiness Index was created by E.W. Dreiss to determine whether the market is trending or ranging.
The indicator plots only the ADX line, but dynamically adjusts its color based on both trend strength and market structure:
How to Use:
- Focus on green phases for high-probability trend trading setups
- Be cautious during yellow phases, as trends may be unstable or deceptive
- Avoid trend-following strategies during red phases, where markets are likely ranging
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