Vertical Horizontal Filter (VHF) Indicator Explained

Adam White's Vertical Horizontal Filter (VHF) divides the window's vertical span (highest close − lowest close) by the horizontal path (sum of all close-to-close moves). Trending markets are 'vertical'; congested ones are 'horizontal' — the ratio says which you're in.

How It Works

• (Highest close − lowest close) ÷ Σ|close changes| over the window.
• Rising VHF: trend developing. Falling VHF: congestion deepening.
• Levels are market-specific; the direction of VHF is the primary read.

How to Trade It

White's original intent: let VHF pick your weapon — trend-following indicators when VHF rises, oscillators when it falls. Automate exactly that: one strategy per regime, gated by VHF's slope or level.

Building It in Setup.Cash

Add Vertical Horizontal Filter (VHF) in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. The Choppiness Index answers the same question on a bounded scale. For the full category overview, see the volatility & statistics library guide.

Volatility indicators qualify trades rather than generate them — backtest your system with and without this filter and compare the drawdowns.