Market Entropy
Indicator
109 downloads
Version 1.0, Aug 2025
Windows, Mac
Since 26/05/2025
463.1M
Traded volume
61.34K
Pips won
16
Sales
1.48K
Free installs
Description
Market Entropy is a dual indicator (oscillator + optional price overlay) that quantifies market organization and flags regime shifts across Order → Transition → Chaos. It adds a second line, Trendness (DC), to separate true trend from volatility squeeze.
How it works:
- Uses only OHLCV components: DC (directional consistency), FlipRate (sign flips), Volatility_n (ATR/ATRlong), VolumeTurb (stddev of ΔVolume).
- Raw entropy:
E0 = 0.5*(1-DC) + 0.3*(FlipRate*VolN) + 0.2*VolumeTurb). - Anti-squeeze term lowers E during ATR compressions → final Entropy ∈ [0..1] with EMA smoothing.
- Markers:
- CRYSTAL — cross below LowThr (order emerges: trend or pre-break squeeze).
- DISSOLVE — cross above HighThr (order breaks: chaos/trend decay).
What you see:
- In the panel: Entropy, Entropy(EMA), Trendness (DC), Low/High thresholds, zone background.
- On chart (toggleable): state-colored bars, a slim ribbon above highs, and CRYSTAL/DISSOLVE markers.
Reading guide:
- E < LowThr → Order:
- with high DC → organized trend;
- with low ATR → squeeze (expect break).
- LowThr…HighThr → Transition: structure forming; wait for resolution.
- E > HighThr → Chaos: uncertainty / trend wear-off; avoid naive continuation entries.
Playbooks:
- Squeeze → CRYSTAL → Break/Retest — trade the breakout.
- Trend → DISSOLVE — scale out or tighten risk.
Summary
AI summary
Market Entropy is a dual-component indicator combining an oscillator and an optional on-chart overlay designed to quantify market structure and identify regime shifts among Order, Transition, and Chaos phases. It uses OHLCV data inputs—Directional Consistency (DC), FlipRate (sign flips), normalized volatility (ATR ratios), and volume turbulence (standard deviation of volume changes)—to compute a raw entropy value. This value is adjusted for volatility compressions and smoothed with an EMA, producing a final entropy measure scaled between 0 and 1.
The indicator features a secondary Trendness line (DC) to distinguish true trends from volatility squeezes. It provides visual markers: CRYSTAL signals when entropy crosses below a low threshold indicating emerging order (trend or pre-break squeeze), and DISSOLVE signals when entropy crosses above a high threshold indicating breakdown into chaos or trend decay.
Displayed in a separate panel, users see Entropy, its EMA, Trendness, threshold levels, and background zones. On-chart elements include state-colored bars, a ribbon above price highs, and CRYSTAL/DISSOLVE markers, which can be toggled on or off.
Interpretation guidelines classify low entropy with high DC as organized trends, low entropy with low ATR as squeezes anticipating breaks, mid-range entropy as transition phases, and high entropy as chaotic conditions where trend continuation is uncertain. Typical use cases include trading breakouts after squeezes and managing risk by scaling out during trend dissolutions.
The indicator features a secondary Trendness line (DC) to distinguish true trends from volatility squeezes. It provides visual markers: CRYSTAL signals when entropy crosses below a low threshold indicating emerging order (trend or pre-break squeeze), and DISSOLVE signals when entropy crosses above a high threshold indicating breakdown into chaos or trend decay.
Displayed in a separate panel, users see Entropy, its EMA, Trendness, threshold levels, and background zones. On-chart elements include state-colored bars, a ribbon above price highs, and CRYSTAL/DISSOLVE markers, which can be toggled on or off.
Interpretation guidelines classify low entropy with high DC as organized trends, low entropy with low ATR as squeezes anticipating breaks, mid-range entropy as transition phases, and high entropy as chaotic conditions where trend continuation is uncertain. Typical use cases include trading breakouts after squeezes and managing risk by scaling out during trend dissolutions.
Indicator profile
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Price
Since 26/05/2025
463.1M
Traded volume
61.34K
Pips won
16
Sales
1.48K
Free installs