A Vortex Indicator was introduced in the Technical Analysis of Stocks and Commodities, published in 2010. Market technicians developed it originate from Switzerland and are called Etienne Botes and Douglas Siepman. J. Welles Wilder’s discoveries inspired their work.
The Vortex indicator has been well-known since its introduction. It’s part of the vortex indicator that follows trends. The signals it generates are incredibly accurate.
The Vortex Indicator is created up of two lines oscillating. They aid in confirming the trend and predicting the direction of change.
One line in the vortex indicator signals positive price movements (+VI), and the second is negative (-VI). Essential points are where the lines intersect concerning each other. These crossings provide buy or signals to sell.
The vortex indicator calculation is built on the highs and lows during a particular amount of time. The positive trend is measured by the distance between the low of the last week and the current high—a distance of more than the previous high and the current low shows a negative trend. The distance grows larger when price fluctuations are more significant.
The requirements can alter the vortex indicator’s period. The outcomes of the results are shown in the form of 2 oscillating lines. Their crossovers create signals for traders to enter the market. However, it could be beneficial to utilize additional indicators to avoid false signals and whipsaws.
You must be logged into your Pocket Option account to include the indicator in your chart. Select the asset and then make the chart. Click on the Chart analysis icon. Then, navigate to the indicator tab. Then, you will see the indicator group for momentum. The vortex indicator is one of them.
You can also type an indication’s name or the code you are trying to find within the search bar on the right-hand side of the screen.
Each indicator has default settings. The overbought zone can be set to 1.1. The oversold zone is set at 0.9. If using a five-minute chart, choose the duration on the top line with a value of 21 or even 34.
The longer duration will result in fewer crossovers appearing in your graph. However, it’s less sensitive to whipsaws. If you opt for an earlier period, it will result in more crossovers. However, you will also see you will also see more false signals.
It is well-known that the instances when two lines of vortex indicators cross are the most significant moments. If you see that the +VI line is crossing above -VI, you should open buy trades because the price direction is likely to change. If +VI crosses below -VI, it signals to initiate the sell trade. Be cautious.
The best way to use this indicator is to link it to other instruments. It shouldn’t be used to generate signals by its own. The classic interpretation is sufficient to discern the trend but can produce many false signals in times of consolidation.
It’s an excellent idea to utilize an additional indicator to confirm the entry points of your transactions. Moving Average Convergence Divergence Moving Average Convergence Divergence creates an ideal combination with the vortex indicator.
It is suggested that you keep the MACD settings in the default setting. However, you can play around using the indicators settings.
Find the crossovers in both indicators. If they occur on the same date (it does not have to be an exact date), the signal for opening the trading position is vital. Trading with the indicator using the MACD binary option is an excellent option.
Buy a position at the time that crossovers occur following a prolonged downtrend. They must be close to one another. However they don’t have to occur at the same time. A distance of 3-4 candles is a reasonable distance with a time frame of 5 minutes that allows you to keep your trading open for approximately 30 minutes.
Sell a trade when the cross-overs of each indicator occur following the upward trend. You can also keep the trading open for up to 30 minutes when using a time frame of 5 minutes.
There are many advantages using the vortex indicator. It is the first unusual indicator. This means it can provide you with an advantage over other indicators. The vortex indicator is reasonably easy to comprehend.
Third, the indicator could be easily integrated alongside other indicators such as MACD, the Average True Range (ATR), and MACD.
There is a sort of disadvantages to using these indicators.
The vortex indicator was developed based on works by J. Welles Wilder. He invented various other indicators of technical significance as well. The indicator is a trend-following indicator that consists of two lines oscillating. The lines that cross indicate excellent places to enter.
To avoid false signals, utilize a different indicator, such as the MACD. This increases your chances of being successful.
Don’t forget. There’s an opportunity to practice for free for you to use on the IQ Option platform. It is available until you become comfortable with a particular method. You can then transfer to a live account later.
Let us know about your experience when trading using indicator. There is a comments section below, which is an ideal place to post your thoughts.
Become one of the successful trader and trade Pocket Option on behalf of the link given below. We may have a small commission after signing up with the use of the link.
You can also see our other related content / posts: