Vortex Indicator for MT4

0
1038
Vortex Indicator for MT4

Introduction to the Vortex Indicator

The Vortex Indicator was first introduced by Etienne Botes and Douglas Siepman in their book “Technical Analysis of Stocks & Commodities”.

It was intended to be a reversal signal indicator that could help traders identify potential trend reversals objectively.

What is the Vortex Indicator?

The Vortex Indicator is a trend reversal indicator which can be used as a reversal signal. It indicates trends and trend reversals by plotting two lines – an uptrend line (VI+) and a downtrend line (VI-).

Trend reversal signals can be confirmed based on how these two lines interact.

Vortex Indicator for MT4

How the Vortex Indicator Works?

The Vortex Indicator begins its computation by finding the True Range of price. This could either be the distance of the current high and current low, current high and previous close, or current low and previous close, whichever is higher.

It also takes the distance between the current high and prior low as the measure for the uptrend (VM+), and the distance of the current low and the prior high as the measure for the downtrend (VM-).

It then sums up its measurement of the True Range, its measure of the uptrend, as well as its measure of the downtrend.

It then plots the VI+ line by dividing the sum of the uptrend (VM+) over the True Range. It also plots the VI- line by dividing the sum of the downtrend measure (VM-) over the True Range.

This indicator plots a green line to represent the VI+ line, and a red line to represent the VI- line.

How the Vortex Indicator Works

How to Use the Vortex Indicator for MT4

The Vortex Indicator provides trend reversal signals based on the crossing over of the VI+ and VI- lines.

A bullish trend reversal would trigger the VI+ line to cross above the VI- line coming from below. Inversely, a bearish trend reversal would trigger the VI+ line to cross below the VI- line coming from above.

These crossovers between the two lines can be used as the main crossover signal. However, it is better used as a confirmation of a trend reversal in confluence of other price action or indicator-based trend reversal setups.

Buy Trade Setup

When to Enter?

Identify a downtrend market with a clear diagonal resistance trendline. Wait for price to break above the resistance line. Enter a buy trade order only if the VI+ line crosses above the VI- line confirming the bullish reversal. Set the stop loss on the support below the entry candle.

When to Exit?

Close the trade as the VI+ line crosses below the VI- line.

How to Use the Vortex Indicator for MT4 - Buy Trade

Sell Trade Setup

When to Enter?

Identify an uptrend market with a clear diagonal support trendline. Wait for price to break below the support line. Enter a sell trade order only if the VI+ line crosses below the VI- line confirming the bearish reversal. Set the stop loss on the resistance above the entry candle.

When to Exit?

Close the trade as the VI+ line crosses above the VI- line.

How to Use the Vortex Indicator for MT4 - Sell Trade

Conclusion

This indicator has the potential to produce excellent trend reversal signals. However, as a standalone indicator it could still be susceptible to false signals especially on choppy markets.

Context is key when using this indicator. The signals it produces tend to work best merely as a confirmation of a reversal which in confluence with a reversal trade setup.

Recommended MT4/MT5 Brokers

XM Broker

  • Free $50 To Start Trading Instantly! (Withdraw-able Profit)
  • Deposit Bonus up to $5,000
  • Unlimited Loyalty Program
  • Award Winning Forex Broker
  • Additional Exclusive Bonuses Throughout The Year

XM broker

>> Sign Up for XM Broker Account here <<

FBS Broker

  • Trade 100 Bonus: Free $100 to kickstart your trading journey!
  • 100% Deposit Bonus: Double your deposit up to $10,000 and trade with enhanced capital.
  • Leverage up to 1:3000: Maximizing potential profits with one of the highest leverage options available.
  • ‘Best Customer Service Broker Asia’ Award: Recognized excellence in customer support and service.
  • Seasonal Promotions: Enjoy a variety of exclusive bonuses and promotional offers all year round.

fbs broker

>> Sign Up for FBS Broker Account here <<

 

Upgrade

(Free MT4 Indicators Download)

Click here below to download:

Vortex Indicator for MT4

Get Smarter About Forex Trading Using Indicators

Join 100,000+ subscribers and get our 5 min daily newsletter on what matters in forex.

We do not sell or share your information with anyone.

LEAVE A REPLY

Please enter your comment!
Please enter your name here