Hey Nikki, thanks for your question! You are correct that the way you are current applying “extreme dynamics” is incorrect. The way you are using the arm to play louder and tilt the bow more to play softer means you aren’t relying on the index as much as you should to guide the bow. Extreme dynamics can be applied solely by what the index finger is doing, with no need to tense/flex other muscles. This could be a short-term solution, but once you start applying difficult techniques along with dynamics you will have a hard time. You want the arm to be as relaxed as possible as you are playing soft or loud, and the only different is the amount of bow you are using and how much you are pressing down with the index.
Hope that helps!