The Better Choppiness Index (BCI) is a market condition indicator developed by E.W. Dreiss, designed to help traders identify whether the market is trending or choppy/flat. It’s based on the Average True Range (ATR) and works on all timeframes, making it suitable for both intraday traders and long-term investors.
How the Better Choppiness Index Works
- The indicator plots three lines in a separate window under the price chart:
- Central thick line → Choppiness Index
- Two red lines → Bollinger Bands for interpretation
- Choppiness values range from 0 to 100:
- 0–38.2 → Market is trending (strong trend)
- 38.2–61.8 → Transitional zone
- Above 61.8 → Market is flat or ranging
- Bollinger Bands Interpretation:
- Above upper band → Flat market
- Below lower band → Trending market
- Alerts:
- Automatic notifications when the market transitions from flat to trending or vice versa
⚠️ Note: The BCI does not indicate trend direction (bullish or bearish). It only shows market state.
How to Use the Better Choppiness Index
Although the BCI does not provide buy/sell arrows, it’s a valuable tool for strategy selection:
Example Strategy – Multi-Timeframe Approach:
- On a 30-minute chart, the BCI shows values mostly above the upper Bollinger Band → the market is flat
- Switch to a 5-minute chart to trade reversal signals from an oscillator like RSI or Stochastic
- When the 30-minute BCI drops below 38.2 → the market becomes trending
- Enter a trend-following trade after a pullback on the 5-minute chart
This method ensures that your trading strategy matches the current market condition, increasing the probability of profitable trades.
Advantages
- Non-repainting → reliable historical data
- Works on all timeframes → from intraday to weekly charts
- Automatic alerts → saves time monitoring the market
- Helps select the best strategy → flat vs. trending market
Limitations
- Does not provide buy or sell signals
- Must be combined with price patterns or other indicators to generate trade entries
Conclusion
The Better Choppiness Index for MT4 is a powerful market condition filter. It allows traders to distinguish between trending and flat markets, helping them align their trading strategy with current market behavior. By combining the BCI with oscillators, Price Action, or other entry signals, traders can improve the accuracy of their trades.
✅ Free to download for MT4 and suitable for all trading styles and timeframes.
