Vortex Indicator (VI) Explained

The Vortex Indicator (VI) was inspired by the vortex flows of water: two intertwining lines — VI+ (positive movement) and VI− (negative movement) — that capture the tug-of-war between buyers and sellers. When one line overwhelms the other, a trend change is underway.

How It Works

Over the chosen period (default 14), the indicator relates upward range movement (today's high vs yesterday's low) and downward range movement (today's low vs yesterday's high) to true range:

• VI+ above VI−: bullish pressure dominates.
• VI− above VI+: bearish pressure dominates.
• The crossover is the signal — direction has flipped.
• The spread between the lines measures how one-sided the market is.

How to Trade It

1. Crossover entries. Long when VI+ crosses above VI−, short on the reverse. Cleanest on trending markets and higher timeframes.

2. Trend confirmation. Use the VI relationship as a gate for another system: only take longs while VI+ > VI−.

3. Spread strength. A wide spread confirms conviction; a narrowing spread warns the trend is losing energy before the actual cross.

Building It in Setup.Cash

Add Vortex in the strategy builder and condition on the VI+ / VI− crossover or their spread. Like most crossover systems it suffers in chop, so pair it with ADX or a StdDev volatility floor to skip dead markets.

Tuning

• Period 14: standard, fairly responsive.
• Longer (21–30): fewer whipsaws, later entries — better for swing trading.
• Shorter (7–10): aggressive, only with a strong regime filter.

Related Reading

Vortex competes directly with Aroon and the DI+/DI− lines of ADX — three different answers to "who's in control?". Backtest them head-to-head on your market; the winner varies by asset class.