What it is
Etienne Botes and Douglas Siepman introduced the Vortex indicator in 2010, inspired by the way water flows in vortices. It compares how far each high reached above the previous low (upward movement) with how far each low reached below the previous high (downward movement).
Both lines usually sit around 1.0. When one climbs to 1.1 or more while the other drops below 0.9, one side clearly dominates.
How it is calculated
1. Upward movement for each candle = the absolute distance from this high to the previous low. 2. Downward movement = the absolute distance from this low to the previous high. 3. True range = the largest of: high minus low, high minus previous close, previous close minus low (absolute). 4. Add up each over 14 candles. 5. VI+ = total upward movement / total true range. VI- = total downward movement / total true range.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Length | 14 | 2 to 200 | How many candles are summed. Shorter (7 to 10) reacts sooner but crosses more often; longer (21 to 25) gives steadier trend reads. |
How to read it
How to trade it
- 1
On a 1 hour gold chart, wait for VI+ to cross above VI- on a closed candle.
- 2
Mark the high of the crossover candle. Enter long only if a later candle closes above that high.
- 3
Stop below the low of the crossover candle or the recent swing low, for example 8 to 12 points on gold.
- 4
Target 2 times the stop, or trail the stop under each new swing low.
- 5
Exit if VI- crosses back above VI+.
The long is wrong if VI- crosses back above VI+ before the entry trigger, or if price closes below the crossover candle's low.
WickSpeak draws VI+ and VI- in their own pane and writes a plain-English reading on the live candle: what the lines measure, which side is dominating now, how to trade it and what would prove it wrong. In Playbook, a condition can check when VI+ crosses above or below VI-, or VI+ sits above or below VI-.
Best markets and timeframes
Best on 1 hour to daily charts of gold, US30, NAS100 and trending forex pairs. In tight ranges and the Asian session the lines cross back and forth with little meaning.
Common mistakes
- Entering on the cross candle itself. Waiting for a close above the cross candle's high filters many false starts.
- Using it in a range. The lines tangle and every cross becomes a whipsaw.
- Ignoring the gap. A cross where the lines barely separate shows a weak trend.
Works well with
Questions traders ask
What is the best setting for the Vortex indicator?
14 periods is the common default. Its creators also tested 21 and 25 for longer-term trends. Shorter settings react faster but give more false crosses.
How do you read VI+ and VI-?
VI+ measures upward movement and VI- downward movement. Whichever is on top shows the direction in control, and a cross shows a possible change.
Is the Vortex indicator like ADX?
It is related. Both use true range and directional movement, but Vortex measures movement from the previous candle's opposite extreme and does not produce a single strength line like ADX.
Does the Vortex indicator work on forex?
Yes. It only uses highs, lows and closes, so it works on forex, gold, indices and crypto alike. It is most useful when the pair is trending.