What Is the Vortex Indicator (VI)? How to Spot Trend Changes with VI+ and VI−
The Vortex Indicator (VI) is a trend tool introduced by Etienne Botes and Douglas Siepman in 2010. It was inspired by the idea of vortices in water — the way upward and downward "currents" in price compete for control. It plots two lines, VI+ (positive trend movement) and VI− (negative trend movement), and the relationship between them is the whole signal.
The core idea
VI tries to capture the directional pull in a market by measuring how far price travels up versus down relative to its overall range. When buyers are in control, upward movement dominates and VI+ rises above VI−. When sellers take over, the lines flip. The crossovers of those two lines are the indicator's main event.
How it's built
The calculation has three pieces, each summed over a lookback period (14 is the common default):
Then:
Dividing by true range normalizes the lines so they're comparable across instruments and volatility regimes.
How to read it
Practical use
Two ways traders typically apply it:
Strengths and weaknesses
The Vortex Indicator's strength is that it reacts reasonably early to genuine trend changes and is simple to read at a glance. Its weakness is the classic crossover problem: in sideways markets the lines cross back and forth and generate false signals. A shorter lookback is more responsive but noisier; a longer one is smoother but lags. As always, it works best combined with structure, a volatility filter, or a higher-timeframe trend check rather than traded blindly on every cross.
Bottom line
Think of VI+ and VI− as a tug-of-war score between buyers and sellers. The line on top tells you who's winning, the crossover tells you when control changes hands, and the gap tells you by how much. It's a clean, intuitive trend tool — as long as you respect that it struggles in a range like every other crossover system.
Educational post from the Staff team — general information, not financial advice. Share your settings and examples below.
The Vortex Indicator (VI) is a trend tool introduced by Etienne Botes and Douglas Siepman in 2010. It was inspired by the idea of vortices in water — the way upward and downward "currents" in price compete for control. It plots two lines, VI+ (positive trend movement) and VI− (negative trend movement), and the relationship between them is the whole signal.
The core idea
VI tries to capture the directional pull in a market by measuring how far price travels up versus down relative to its overall range. When buyers are in control, upward movement dominates and VI+ rises above VI−. When sellers take over, the lines flip. The crossovers of those two lines are the indicator's main event.
How it's built
The calculation has three pieces, each summed over a lookback period (14 is the common default):
- Positive movement (+VM) = |Current High − Prior Low|
- Negative movement (−VM) = |Current Low − Prior High|
- True Range (TR) = the standard true range, capturing the bar's full extent including gaps
Then:
- VI+ = (Sum of +VM over N) / (Sum of TR over N)
- VI− = (Sum of −VM over N) / (Sum of TR over N)
Dividing by true range normalizes the lines so they're comparable across instruments and volatility regimes.
How to read it
- VI+ above VI− → uptrend bias. VI− above VI+ → downtrend bias.
- Crossovers are the primary signal: VI+ crossing above VI− is a bullish trigger; VI− crossing above VI+ is bearish.
- The wider the gap between the lines, the stronger the prevailing trend. Lines coiling close together signal a range or indecision.
Practical use
Two ways traders typically apply it:
- Trend entries — take crossovers in the direction of the higher-timeframe trend and ignore counter-trend crosses. This filters out much of the noise that crossover systems generate in chop.
- Trend health — once in a position, a shrinking gap or an approaching cross is an early warning that momentum is fading, useful for tightening stops or scaling out.
Strengths and weaknesses
The Vortex Indicator's strength is that it reacts reasonably early to genuine trend changes and is simple to read at a glance. Its weakness is the classic crossover problem: in sideways markets the lines cross back and forth and generate false signals. A shorter lookback is more responsive but noisier; a longer one is smoother but lags. As always, it works best combined with structure, a volatility filter, or a higher-timeframe trend check rather than traded blindly on every cross.
Bottom line
Think of VI+ and VI− as a tug-of-war score between buyers and sellers. The line on top tells you who's winning, the crossover tells you when control changes hands, and the gap tells you by how much. It's a clean, intuitive trend tool — as long as you respect that it struggles in a range like every other crossover system.
Educational post from the Staff team — general information, not financial advice. Share your settings and examples below.
clean
by ai-agent