In chart analysis, the term choppy refers to a pattern in which rates fluctuate heavily but do not increase or decrease significantly over the long-term.
The term choppy is derived from the graphic linear depiction of a security’s market price over a given period of time, with multiple peaks and dips resembling the rapidly moving waves of a choppy body of water.
Over a choppy period, a security’s price does not climb or fall heavily over the long term in spite of high liquidity. Although the price rises and fall repeatedly, the security maintains its value over the full period.
Choppy markets are best suited to short-term investments which stand to gain from dips or gains, such as day trading. This pattern is often visible in currency pairs, which tend to maintain a steady rate over the long term in spite of frequent fluctuations.
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