Know if Price is Stuck in Chop or Trending!
The Market Chop Index™ (MCI™) is a breakthrough technical indicator that calculates trend strength, generates accurate exit signals for long and short positions, and routinely predicts large price moves beforethey actually occur. By utilizing elements of “Chaos Theory” to accurately determine whether price is trending or consolidating, the Market Chop Index™ is able to reveal the true nature of price action of any instrument or timeframe.
The Market Chop Index™ is the most accurate and effective indicator of its kind — consistently outperforming the ADX and other volatility-based indicators. It’s unique ability to generate “Trend Exhaustion” exit signals and “Linear Market” volatility signals makes it an extremely versatile and effective trading indicator.
The MCI & MVI Indicator Package includes:
Market Chop Index™ (MCI™)
MCI™ Market Analyzer (NinjaTrader Users)
MCI™ RadarScreen (TradeStation Users)
MCI™ Market Scanner (MultiCharts Users)
Market Verticality Index™ (MVI™)
MVI™ Differential PaintBar
MVI™ Market Analyzer (NinjaTrader Users)
MVI™ RadarScreen (TradeStation Users)
MVI™ Market Scanner (MultiCharts Users)
Market Chop Index (MCI)
— Trend Exhaustion and Linear Market Signals —
By assessing the verticality of price movements, the Market Chop Index™ is able to decipher whether the market is trending, ranging, or moving randomly. The MCI value is virtually always within the range of 1.0 to -1.0.
- The more verticality that price has, the closer the MCI moves to 1.0.
- The less verticality that price has, the closer the MCI moves to -1.0.
The MCI also generates “Trend Exhaustion” and “Linear Market” signals!
Trend Exhaustion signals are generated when the MCI is above the “Upper Extreme” at 1.0. They are ideal when used as exit or profit-taking signals because they often register just before the trend loses its steam and price reverses its direction – helping to protect your position by alerting you when there is little to no profit potential.
Linear Market signals are generated when the MCI is below the “Lower Extreme” at -1.0. They will alert you to when price is stuck in chop or sideways consolidation, which often leads to a significant and rapid increase in both the verticality and volatility of price.
MCI vs. ADX
— A More Effective Way to Measure Trend Strength —
Other indicators that attempt to measure whether price is trending or consolidating all have fatal flaws that inhibit their effectiveness. The most popular is the ADX, which aims to calculate trend strength and momentum. However, the ADX formula cannot always determine if price is trending or consolidating because it is directionally biased. In other words, the ADX will increase if price keeps moving higher, but it will begin to decrease if price reverses its direction and rapidly moves lower (even though price is still technically “trending”). This a severe limitation of the ADX because it is unable to determine if price is truly trending or ranging… it only measures the trend strength of one direction as opposed to both. The result is an often deceptive and potentially dangerous indicator that only works well on some occasions.
The MCI is superior to the ADX because it is always able to determine whether price is trending, consolidating, or moving in a random fashion. This is due to the fact that the MCI is calculated based on the verticality of price movements, whereas the ADX is calculated based on a high/low trading range. Therefore, the MCI value will not necessarily decrease if price keeps moving higher and then reverses its direction and rapidly moves lower… in fact, the MCI value may even increase if price begins to move lower with more verticality. This is a much more effective way to determine whether price is trending (increased verticality/volatility) or consolidating (lack of verticality/volatility), because the MCI is only concerned with the verticality of price movements and is not directionally biased.
The following screenshots illustrate the profound difference between the ADX and the MCI. Both are using identical length settings, but note how the MCI is able to continuously diagnose price action while the ADX repeatedly “resets” itself (decreases despite the fact that price is still trending).
The Market Chop Index™ Dots (MCI™ Dots) plots dot signals above and below price whenever the MCI generates “Trend Exhaustion” or “Linear Market” signals. It is ideal for traders who are only interested in being notified of the various MCI signals.
The Market Chop Index™ PaintBar (MCI™ PaintBar) is a visual aid that color-codes price bars whenever the MCI generates “Trend Exhaustion” or “Linear Market” signals. Like the MCI Dots, it is ideal for traders who are only interested in being notified of the various MCI signals.
Market Verticality Index (MVI)
— Measuring Directional Price Movements —
The Market Verticality Index™ (MVI™) is a proprietary technical indicator and one of our most recognized contributions to the field of technical analysis, since the concept of “price verticality” has rarely been touched upon in the past.
The formula behind the Market Verticality Index™ measures the strength of vertical price movements, otherwise known as the “verticality” of price. This is accomplished by measuring the distance between the highs and lows of the current bar and previous bar. It is important to note that when we measure the verticality of price, we are only concerned with whether or not price exceeded the previous bar’s high and/or low.
- A high degree of verticality (relative to the timeframe and instrument being traded) means that price is frequently moving above the high or below the low of the previous bar. This is an ideal environment for trend-traders who try to capture large price moves amongst issues with high volatility, beta and average true range (ATR).
- A low degree of verticality (relative to the timeframe and instrument being traded) means that price is rarely moving above the high or below the low of the previous bar. This is an ideal environment for pattern-traders who try to capture breakouts from sideways price channels.
If the high of the current bar > high of the previous bar: “Up Verticality” is defined as the difference between the two highs.
If the high of the current bar < high of the previous bar: “Up Verticality” is nonexistent (zero).
If the low of the current bar < low of the previous bar: “Down Verticality” is defined as the difference between the two lows.
If the low of the current bar > low of the previous bar: “Down Verticality” is nonexistent (zero).
While the Market Verticality Index™ measures the amount of “Total Verticality”, the MVI™ Up-Down calculates and separately plots both “Up Verticality” and “Down Verticality”. Therefore, the MVI Up-Down is actually a trend-based indicator that is designed to show traders whether the verticality of the last “N” bars is biased to the upside (bullish) or downside (bearish). This is quite different than the Market Verticality Index™, which is only concerned with the total amount of verticality and is therefore more of a volatility-based indicator.
The MVI Up-Down is intended to be used as a trend-filter in a similar fashion to the popular DMI (Directional Movement Index). Long positions should only be considered when the MVI Up is dominant, whereas short positions should only be considered when the MVI Down is dominant.
The MVI™ Differential calculates and plots the difference between “Up Verticality” and “Down Verticality”. Therefore, the MVI Differential is also a trend-based indicator that is designed to show traders whether the verticality of the last “N” bars is biased to the upside or downside.
The MVI Differential is intended to be used as a trend-filter since it measures the difference between “Up Verticality” and “Down Verticality” to provide a unique and effective diagnosis of the underlying trend (more specifically, the directional bias of price action). It is essentially a simpler version of the MVI Up-Down in that it is plotted as one line with a customizable average, whereas the MVI Up-Down provides a more detailed profile of verticality.
Want to Scan for Signals? It's Easy...
Automated Signal Scanning
— Finding the Best Volatility Signals —
Both the Market Chop Index™ & Market Verticality Index™ include special "Scanner" Indicators designed to scan for signals and trend conditions using the NinjaTrader Market Analyzer, TradeStation RadarScreen, or MultiCharts Market Scanner. And all columns, colors, and text are fully customizable!
As you can see in the screenshots below, using the MCI™ & MVI™ with the NinjaTrader Market Analyzer, TradeStation RadarScreen, or MultiCharts Market Scanner allows you to scan for volatility signals across any list of symbols — in just seconds!
NinjaTrader Market Analyzer - Market Chop Index
NinjaTrader Market Analyzer - Market Verticality Index
TradeStation RadarScreen - Market Chop Index
TradeStation RadarScreen - Market Verticality Index
100% Risk-Free Guarantee
Not satisfied with your Indicators? No problem!
You can exchange your Indicator Package for another of equal or lesser value — up to 30 days after purchase!
Superior Customer Support
Have a question about the MCI™ and MVI™ Indicator Package?
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We take great pride in our customer support and are happy to help our fellow traders!
Check out the Market Chop Index™ User Guide to learn more!
(Click on the Image Below to View the User Guide)