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Creator: Etienne Botes and Douglas Siepman
There are two lines in the Vortex indicator. An uptrend line (V+) and a downtrend line (V-).
There are three parts to the indicator: range, upside movement and downside movement.
Range is true range of the stock. Upside movement is a difference between current high and previous close. Downside movement is the absolute value of a difference between current low and previous high.
The indicator calculates the sum of all three over the last 14-day or other user-defined period. This is an important feature of this indicator. It calculates sum instead of average, so it does not have a smooth appearance. The indicator is a little aggressive in nature.
V+ line is upside movement divided by range. V- line is downside movement divided by range.
When the V+ line is above the V- line, it is bullish. The upside movement is stronger than the downside movement and the trend is strong.
When the V- line is above the V- line, it is bearish. The downside movement is stronger than the upside movement and the downtrend is stronger.
14 is a widely used parameter.
The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.
The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.
This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.