ARCH Proxy

ARCH Proxy (ARCH) - Volatility Assessment Indicator

The ARCH Proxy indicator (short title: ARCH) is a dynamic, multi-factor volatility assessment tool designed to help traders quickly gauge the current energy and risk level of the market. It plots a real-time measure of price fluctuation against its long-term historical average and adaptive High/Low Volatility thresholds. This provides a clear, objective framework for distinguishing between periods of market compression (low-energy consolidation) and expansion (high-risk volatility), optimizing strategy selection and risk management.
Simplified Trading Guide

The ARCH indicator offers a clear, objective signal framework to guide your trading decisions based on market energy :

Spotting High-Risk Expansion (Climax):

Signal: The main ARCH Proxy line moves sharply above the High Volatility Threshold (typically a red line).

Action: This signals the market is in a period of intense, climactic price action. This is often a time to avoid new entries, reduce exposure, or look for potential trend exhaustion and reversals due to the high risk of a sudden correction.

Identifying Low-Energy Compression (Setup):

Signal: The main ARCH Proxy line trends consistently below the Low Volatility Threshold (typically a green line).

Action: This indicates a market consolidation phase. This "low-energy" compression frequently precedes a strong breakout (expansion). Traders should prepare for an entry in the direction of the dominant trend, anticipating a coming surge in momentum.

Normal Trading Conditions:

Signal: The ARCH Proxy line is fluctuating between the High and Low Volatility thresholds.

Action: The market is in a normal state. Use this time to follow the dominant trend with standard risk parameters.