Hi. Is this exchange of dialogue correct and natural? And what is the difference in meaning between using 'could' and 'would' in the second sentence?
What are you doing here?
I thought I could/would try it out.
You thought you could/would try it out?
Yes. I know other guys who have tried out yoga and liked it.
"Would" is most appropriate in your dialogue. " Present. I think I will try (it).
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"Would" is most appropriate in your dialogue. It's the past tense form of the modal "will."
Present. I think I will try (it).
Past. I thought I would try.
Could = ability or permission.
If the person were not allowed to be there, and is asked to leave, "could" fits the context.
anonymousdifference in meaning between using 'could' and 'would'
'could' includes 'would' in its meaning thus:
could = would be able to
I thought I would try it out.
I thought I [could / would be able to] try it out.
CJ
You can read and compare.
Would - English Grammar Today - Cambridge Dictionary
https://dictionary.cambridge.org/grammar/british-grammar/modals-and-modality/would*See Would, Reported clauses