Displays the anticipated market type based on the last 300 bars of data:
Trending Market: High probability that the next bar will be in the same direction as previous. Best conditions for a trend trading strategy
Neutral Market: High probability that price is random - the next bar direction is a coin toss. Many "typical" indicators fail in a random market
Sideways Market: High probability that price is autoregressive and the next bar direction is opposite the previous - compressed markets often have sudden fast breakouts
This tool does not give you entries and exits, but assists in deciding to use a Trend-following or Mean-reverting strategy.
Blue (3.5-6) indicates a trending market.
Yellow (0-2.5) indicates a sideways market.
Green (2.5-3.5) indicates a random market
This algorithm tells you when it breaks down by indicating a Neutral/Random market. In short, it can't say the market type and advises you to not trade or simply use another tool in the meantime.
I personally use this tool to configure my trading robots on a weekly basis. I combine manual TA and stats algos to try and determine what type of market the next week holds, with a fair bit of success.
The algorithms incorporated are Market Meanness Index (which I've made Open Source) and Fractal Dimension, a significantly faster algo than the MMI, but using a different set of maths.