Directionless, noisy price action that repeatedly reverses, stopping out both longs and shorts.
Chop is a range with attitude: enough movement to trigger entries and stops, not enough to reach targets. It is where trend strategies lose and overtrading does the most damage.
Recognizing chop early and sitting out is a skill. Low relative-volume and repeated fakeouts are the usual signs.
Example: ES trades between 5,000 and 5,012 for four hours, crossing vwap nine times. Every breakout attempt fails within three candles.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.
Educational only, not advice. Spotted an error? Post in Site Feedback.