Vortex Indicator (VI)
Vortex Indicator (VI) is a technical analysis tool that identifies the start of new trends, their continuation, or reversal by comparing the strength of upward and downward movements.
The indicator was developed by Etienne Botes and Douglas Siepman and first introduced in the journal Technical Analysis of Stocks & Commodities in 2010.
It draws inspiration from J. Welles Wilder’s concepts (creator of ADX and Directional Movement) and natural vortex flows, where price “spirals” in the direction of the dominant impulse.
How Vortex Works
Section titled “How Vortex Works”The indicator measures directional movement by comparing the extremes of adjacent candles:
- VI+ (positive line) — reflects the strength of upward momentum. It rises when the current high is significantly above the previous low (buyers aggressively push the price higher).
- VI− (negative line) — reflects the strength of downward momentum. It rises when the current low is significantly below the previous high (sellers dominate).
The greater the difference between the lines, the stronger the current trend. A crossover of one line over the other signals a change in dominant direction.
Vortex performs well in trending crypto markets with strong and sustained impulses, but may produce false signals (whipsaws) in flat or low-volatility conditions.
Signals Based on Crossovers:
Section titled “Signals Based on Crossovers:”- Blue line (VI+) crosses red line (VI−) from below → long signal (upward movement becomes stronger than downward).
- Blue line (VI+) crosses red line (VI−) from above → short signal (downward movement takes control).
The “Reverse signal” option inverts the signals.
It is recommended to use with calculation type “At bar closing”.
Calculation “Once per minute” may generate many false signals.
On the Veles platform, the standard Vortex indicator from the TradingView library is used. The indicator period is fixed at 14.
Vortex is one of the “cleanest” trend-following indicators with a minimal number of parameters.
It is perfectly suited for automation in Veles: the simple crossover logic makes it a reliable filter for entering impulsive moves in the crypto market, especially when combined with volatility (ATR) or oscillators (RSI, Stochastic).
Before using the indicator, it is recommended to test its settings in backtests and ensure the strategy fits your personal trading style.