Vortex indicator is an oscillator that confirms the current trend, its direction and strength. In addition, this tool shows the formation of new trends and the beginning of lateral movement.
Indicator acts on a separate scale below the chart and consists of the following components:
- downtrend line (VI-);
- uptrend line (VI +);
- oversold/overbought levels.
Vortex indicator is a universal trading instrument, therefore, it popular among traders with different experience and trading styles. Now this oscillator is available in the category of momentum indicators on the IQ Option broker platform.
How to connect and configure the indicator?
Trader needs to perform the following actions to enable the Vortex indicator in trade room:
- click on the indicators icon;
- choose the category Momentum;
- choose the Vortex indicator.
The procedure for starting the indicator
Next, the oscillator settings window will open with the Vortex Indicator settings which user can select:
- period of the main lines with parameter 14;
- oversold level – 0.9;
- overbought level – 1.1;
- inset with graphical parameters of components (for choose the color and thickness of the indicator lines).
Vortex indicator settings window
Users can change the settings according to individual requirements or leave as default.
How to trade with a Vortex oscillator?
User must learn to recognize the trading signals before working with the Vortex indicator. The oscillator idea is to compare the highest and lowest points of candles on chart, and the greater the distance between these points, the stronger the current trend.
And how to find out which trend is currently on the market? The main signal lines of the indicator will help the trader to answer this question. By default, the downward trend is indicated by the purple line (VI-), and the uptrend line (VI +) is shown by the blue colour. If during the analysis, VI + moves in the overbought zone (above 1.1), and VI- in the oversold zone (below 0.9), now there is a strong uptrend. Conversely, the market is considered to be descending when the purple line (VI-) moves above the blue (VI +).
Indicator operation logic
Consequently, users of platform IQ Option can recognize the following trading signals using Vortex:
- The downtrend line VI- leaves the oversold zone of 0.9, and the VI+ line intersections the 1.1 level is downwards: the trader needs to open a short position.
- The uptrend line VI+ goes out of the oversold zone of 0.9, and the line VI- intersections the 1.1 level downwards: the trader must open a long position.
- The maximum distance between the lines of the oscillator indicates that the current trend has reached a maximum and will soon change. In this case, the trader needs to close active deals.
- The main lines of the indicator are close to each other and intersect, it indicates a flat. In this case, the trader needs to stop trading or use other analysis instruments.
Vortex indicator trading signals
Vortex indicator is an effective instrument that helps market members to make profitable decisions. This oscillator is great for binary options and Forex. However, traders can match Vortex with trend indicators and other technical analysis instruments to enhance the effect and reduce the number of false signals. A systematic and balanced approach to business is the key to successful trading.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
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