😨 Fear Discount Meter
How deep is the discount, in volatility terms?
A 20% drop means something very different for a calm asset than for a wild one. The Fear Discount Meter measures how far price sits below its 252-bar high in units of ATR and blends that with how weak short-term momentum is. Higher readings mean price is unusually discounted and sentiment appears fearful, which is information, not a signal to buy.
Running live on a simulated market ·
The exact formula
peak = HIGHEST(close, 252)
a = ATR(14)
IF a == 0 THEN ddAtr = 0 ELSE ddAtr = (peak - close) / a
depth = 100 * ddAtr / (ddAtr + 10)
weakness = 100 - RSI(close, 14)
meter = 0.7 * depth + 0.3 * weakness
OUTPUT meter // 0-100 score
How to read it
- Below 30: price is near its yearly high and momentum is healthy; little fear priced in.
- 30 to 60: a moderate pullback or mixed momentum.
- Above 60: price sits many ATRs below its peak with weak momentum, a fearful discount.
- Very high readings can persist in assets that are in long-term decline.
Why it might help
It puts drawdowns into volatility context, making them comparable across calm and volatile assets. It can help long-term investors notice when fear is unusually high without reacting emotionally.
Limitations
- A deep discount can reflect real business problems, not just fear.
- Needs 252 bars of history for a full reading.
- The 10-ATR scaling constant is arbitrary.
Educational only – not financial advice. This page explains ideas and reports the news. It is not a recommendation to buy, sell or hold anything. Markets go up and down and you can lose money. Do your own research and consider talking to a licensed adviser.