vortex indicator(VI)

Vortex indicator was created by Etienne Botes and Douglas Siepman.
Vortex indicator is an oscillator used to identify the start of a new trend as well as the continuation of an existing trend in the market.

The vortex indicator is composed of two curve lines,that is uptrend which is positive(+VI) and downtrend which is negative(-VI).The uptrend line is normally indicated using the blue/green line while the downtrend line is indicated using the red line.
The vortex indicator is based on crossovers for oversold and overbought in the market.
Vortex indicator is calculated using the following steps;

-By calculating the positive and negative trend movements,that is of +VI and -VI based on previous high and low of current and previous periods as follows;

+VM=current period high -previous period low


-VM=current period low- previous period low

+VM14 = 14 PERIOD sum of +VM
 
-VM14=14 PERIOD sum of -VM

-By calculating the true range of the last 14 periods as follows;


TR14= 14 period sum of TR

-The result will be as follows;

+VI 14= +VM14/TR14


-VI 14 = -VM 14/TR14

vortex indicator which is based on crossover on the overbought and oversold in the market  has two crossover lines,that is the green/blue line and the red line.The blue/green line represents the +VI while the red line represents the -VI.Therefore when the green line(+VI) passes above the red line from below,that will be an indication of an oversold in the market thus signaling the trader to close any sell position and open a buy position since the market will start moving upwards while when the red line(-VI) passes above the green line from below,that will be an indication of an overbought in the market thus signaling the trader to close any buy position and enter a sell position since the market will start moving downwards.This is indicated as from the candle sticks chart below;



From the candle sticks chart above,there are 4 points,that is point A,B,C and D. Point A is the point at which the -VI has crossed above the +VI while point B is the point at which the +VI has crossed above the -VI. Point C which is the blue line represents the +VI while point D which is red line represents the -VI. All these points are represented by the red arrow respectively.

At point A ,the red line which is the -VI has crossed above the blue line (+VI) from below thus an indication of an overbought market thus signaling the trader to close any buy position and enter a sell position since the market was starting to move downwards at that point.At point B,the blue line which is the +VI has crossed above the red line (-VI) from below thus an indication of an oversold market thus signaling the trader to close any sell position and enter a buy position since the market was starting to move upwards at point.

Recommendation: If you are a day trader,just use 1 min,5 min,15 min and 30 min time frame while if you are a swing trader just use 1 hour and above time frame if you want vortex indicator to work well for you








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