Entropy (Fiedor/Kontoyiannis) - Part 2 of Fiedor's Theory

This indicator estimates the Shannon entropy of a price series using a Markov chain model of binary returns, following the approach of Fiedor (2014) and Kontoyiannis (1997).

% of Max shows current entropy as a percentage of its theoretical maximum (1 bit for binary up/down moves).

Percentile ranks the current entropy against historical values in the chosen lookback window.
High entropy suggests price movement is less predictable by frequentist models; low entropy implies more structure and predictability.

Use this as an informational oscillator, not a trading signal.
This is a visualization of Part 1 of Fiedor's Theory. The same entropy logic is already embedded in Part 1 however the second pane is a nice reminder of why it works.