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Updated PFA_ATR Locha: Clean Volatility Regime
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ATR Locha – Volatility Regime Indicator
A market-condition tool to identify volatility compression and expansion
Description
ATR Locha is a volatility-regime indicator based on ATR expressed as a percentage of price (ATR%). Instead of predicting price direction, it focuses on identifying market stress states—periods of unusually low volatility (compression) and unusually high volatility (panic or expansion).
Markets often remain calm for long periods and then move sharply when volatility expands. ATR Locha helps traders visually identify these conditions and prepare accordingly.
What the Indicator Shows
• ATR% line showing current volatility intensity
• Lower shaded zone representing volatility compression (ATR Locha zone)
• Upper shaded zone representing volatility expansion / panic
• Regime label displaying the current market state
Core Concept
Price trends often change only after volatility changes.
ATR Locha does not answer “Where will price go?”
It answers “Is risk quietly building or already exploding?”
How to Use ATR Locha
1. Compression Zone (ATR Locha Zone)
When ATR% enters the lower shaded region:
• Market volatility is suppressed
• Price ranges become narrow
• Risk of sudden expansion increases
Trading Insight
• Reduce leverage
• Avoid chasing late trends
• Prepare for breakouts or regime shifts
2. Expansion / Panic Zone
When ATR% enters the upper shaded region:
• Volatility is elevated
• Market is emotionally driven
• Large candles and gaps are common
Trading Insight
• Book partial profits
• Tighten stop losses
• Avoid aggressive fresh entries
3. Normal Regime
When ATR% stays between both zones:
• Market is balanced
• Trends or ranges behave normally
Trading Insight
• Follow your regular trading strategy
Best Use-Cases
• Index analysis (NIFTY, BANKNIFTY, global indices)
• Positional and swing trading
• Risk management and position sizing
• Market regime identification
Advantages (Pros)
• Clear identification of market regimes
• Objective and non-directional
• Acts as an early warning system
• Works well on daily and weekly charts
• Complements any price-based strategy
Limitations (Cons)
• Not a buy or sell signal
• Does not predict price direction
• Volatility compression can persist longer than expected
• Requires confirmation from price structure or volume
Common Mistakes to Avoid
• Using ATR Locha as a standalone trading system
• Expecting immediate breakouts from compression
• Ignoring price action and structure
• Over-leveraging during low volatility periods
Recommended Combinations
• ATR Locha + price structure analysis
• ATR Locha + trend indicators
• ATR Locha + options volatility (IV) analysis
• ATR Locha + support and resistance levels
Summary
ATR Locha is not a trading strategy.
It is a volatility and risk-condition detector.
It helps traders understand whether the market is:
• Calm
• Balanced
• Or under stress
Used correctly, ATR Locha improves discipline, risk awareness, and timing quality.
Disclaimer
ATR Locha is intended for educational and analytical purposes only. It does not constitute investment advice, trading recommendations, or a guarantee of future performance. Market conditions can change rapidly, and volatility regimes may persist longer than anticipated. Users should apply independent judgment, proper risk management, and additional confirmation before making any trading decisions.
Below is the **TradingView-ready publishing text** using **ONLY**:
* **Bold →** `...`
* *Italics →* `...`
No markdown, no emojis, no extra formatting — **100% compatible with TradingView indicator description**.
ATR Locha – Volatility Regime Indicator
A market-condition tool to identify volatility compression and expansion
Description
ATR Locha is a volatility-regime indicator based on ATR expressed as a percentage of price (ATR%). Instead of predicting price direction, it focuses on identifying market stress states—periods of unusually low volatility (compression) and unusually high volatility (panic or expansion).
Markets often remain calm for long periods and then move sharply when volatility expands. ATR Locha helps traders visually identify these conditions and prepare accordingly.
What the Indicator Shows
• ATR% line showing current volatility intensity
• Lower shaded zone representing volatility compression (ATR Locha zone)
• Upper shaded zone representing volatility expansion / panic
• Regime label displaying the current market state
Core Concept
Price trends often change only after volatility changes.
ATR Locha does not answer “Where will price go?”
It answers “Is risk quietly building or already exploding?”
How to Use ATR Locha
1. Compression Zone (ATR Locha Zone)
When ATR% enters the lower shaded region:
• Market volatility is suppressed
• Price ranges become narrow
• Risk of sudden expansion increases
Trading Insight
• Reduce leverage
• Avoid chasing late trends
• Prepare for breakouts or regime shifts
2. Expansion / Panic Zone
When ATR% enters the upper shaded region:
• Volatility is elevated
• Market is emotionally driven
• Large candles and gaps are common
Trading Insight
• Book partial profits
• Tighten stop losses
• Avoid aggressive fresh entries
3. Normal Regime
When ATR% stays between both zones:
• Market is balanced
• Trends or ranges behave normally
Trading Insight
• Follow your regular trading strategy
Best Use-Cases
• Index analysis (NIFTY, BANKNIFTY, global indices)
• Positional and swing trading
• Risk management and position sizing
• Market regime identification
Advantages (Pros)
• Clear identification of market regimes
• Objective and non-directional
• Acts as an early warning system
• Works well on daily and weekly charts
• Complements any price-based strategy
Limitations (Cons)
• Not a buy or sell signal
• Does not predict price direction
• Volatility compression can persist longer than expected
• Requires confirmation from price structure or volume
Common Mistakes to Avoid
• Using ATR Locha as a standalone trading system
• Expecting immediate breakouts from compression
• Ignoring price action and structure
• Over-leveraging during low volatility periods
Recommended Combinations
• ATR Locha + price structure analysis
• ATR Locha + trend indicators
• ATR Locha + options volatility (IV) analysis
• ATR Locha + support and resistance levels
Summary
ATR Locha is not a trading strategy.
It is a volatility and risk-condition detector.
It helps traders understand whether the market is:
• Calm
• Balanced
• Or under stress
Used correctly, ATR Locha improves discipline, risk awareness, and timing quality.
Disclaimer
ATR Locha is intended for educational and analytical purposes only. It does not constitute investment advice, trading recommendations, or a guarantee of future performance. Market conditions can change rapidly, and volatility regimes may persist longer than anticipated. Users should apply independent judgment, proper risk management, and additional confirmation before making any trading decisions.
Release Notes
Condensed Abstract (Advanced)ATR Locha functions as a non-directional volatility-regime discriminator, operationalizing ATR normalized by price to detect latent shifts in market stress dynamics. By stratifying volatility into compression, equilibrium, and expansion states, it isolates pre-trend instability and post-trend exhaustion without invoking directional bias. The indicator is structurally anticipatory rather than predictive, serving as a probabilistic risk-state lens that contextualizes price behavior, enhances temporal positioning, and mitigates regime-mismatch errors when integrated with structural or trend-confirmatory frameworks.
Protected script
This script is published as closed-source. However, you can use it freely and without any limitations – learn more here.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Protected script
This script is published as closed-source. However, you can use it freely and without any limitations – learn more here.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.