Crypto Academy / Season 3 / Week 6 - Homework Post for [@asaj]: Vortex Indicator Strategy

Today I am going to write my homework task about "Vortex Indicator" Lecture by Our respecter professor @asaj. I have learned a lot from this lecture.

1- In your own words explain the vortex indicator and how it is calculated

Vortex Indicator

Vortex Indicator consists of two lines. These lines indicate trend changing direction. we can identify these lines as a positive price movement ( VI + ) and negative price movement ( VI - ).

• Positive Price Movement for Uptrend
• Negative Price Movement for Downtrend

Here is a point when these lines cross each other. This is the indication for buy or sell assets. Vortex Indicator can be used to identify the current trend and reversal trend.

• Vortex Indicator (VI) is a technical indicator used to identify new or existing trends in crypto markets.
• Vortex indicator consists of two indicator lines, each of which represents a positive or negative price trend.
• In general, the top indicator line (VI + or VI-) indicates whether an asset is trending up or down.

The screenshot is taken from tradingview we can see above. We can see two color lines in which Blue indicates uptrend and Red that indicates downtrend. You can also choose the color of your choice in these lines.

Calculation of Vortex Indicator

Calculating Vortex Indicator step required:
1- First, we calculate upward and downward movements by subtracting highs and lows.

• The upward movement (VM+) is calculated as (current high - previous low).
• The downward movement (VM-) is calculated as current low - previous high).

2- Here we calculate number of periods.

If there are 50 periods in the vortex indicator, then calculate as below.

• VM50+ = 50 period sum of VM+
• VM50- = 50 period sum of VM-

3- Calculate the True Range (TR).

The true range is the maximum of either following:
The absolute values ( current high - current low)
The absolute values ( current low - previous close)
The absolute values ( current high - previous close)

4- Calculate for the specified period & Calculate VI+ and VI-

• For 50 periods: TR50 = 50-period Sum of TR
• VI50+ = VM50+ / TR50
• VI50- = VM50- / TR50

2- Is the vortex indicator reliable? Explain

Vortex Indicator is reliable trend indication tool that confirms the current trend and reversal trend with the help of two vibratory lines.
In my point of view, the result of any indicator is not 100%. It depends on the traders strategy if they use more then couple of indicators with VI thn it can be more reliable and produce strong signals for buy or sell assets.
It may be accurate on bigger time frame when VI provide signals of buy or sell. When we use VI in shorter time period it's accuracy become weakness. So, we can VI is reliable.

3- How is the vortex indicator added to a chart and what are the recommended parameters? (Screenshot required)

It is very easy to add *vortex indicator in any crypto chart. we must follow these steps given below.

• Step 1, Go to the https://www.tradingview.com/ and open the chart. This chart is steem/usdt we will add vortex indicator in this chart.

• Click here on indicators in the screenshot.

• Type vortex indicator in search bar and click on Vortex Indicator

• In screen shot below you can see Vortex Indicator added success fully in the chart.

If you will follow these steps you can easily add Vortex Indicator.

Recommended parameters of Vortex indicator
Here are the recommended parameters for Vortex Indicator.
Usaully, 14 period parameters are used as a default. It may be 14 minutes, 14 hours, 14 days, 14 weeks and 14 months.
For more accurate results we need us longer time frame. Some traders suggest 25, 28 and 30 time period.
Most traders use default color for VI+ ( Blue ) and VI- ( Red ). Every trader can use the color of its choice.
Whwn the trader use short period time frame for faster signals, it produce some time false signals. Therefore, I recommend long time period always for accuracy.

4- Explain in your own words the concept of vortex indicator divergence with examples. (Screenshot required)

The two types of divergenec firms on Virtex Indicator Bulish Divergence for Uptrend and Bearish Divergence for Downtrend.
When the Bulish Divergence occurs in Vortex Indicator it gives buy signal.

• The price makes lower low and VI+ makes higher low.
• The price decreases when VI+ increases.

In above screen shot we can see the price is in downward and making lower low and the VI is making higher low. This setup is called bullish divergence and we can see that after confirming this setup price move to upward.

When the Bearish Divergence occurs in Vortex Indicator it gives sell signal.

• The price makes higher high and VI+ makes lower high.
• The price increases when VI+ decreases.

In above we can see the price moving upwards and making higher high and VI+ making higher low, it is a sign of bearish divergence. The most traders exit from this situation.

5- Use the signals of VI to buy and sell any two cryptocurrencies. (Screenshot required)

Here we will use two cryptocurrencies for signals to buy and sell with vortex indicator. We select here ETH/BTC and LTC/BTC for buy and sell signals.
I will show you in screenshot of buy and sell signal on these two cryptocurrencies.

1. ETH/BTC

We can see in this pair for buy and sell signals. The price is bullish when the VI+ (Blue line) crosses the VI- (Red line) to upwards.
When VI+ (Blue line) crosses VI- (Red line) downwards, it indicates the market is bearish and bearish signal confirmed.
We can see in the screenshot below.

2. LTC/BTC

In this pair we can see too for buy and sell signals. When the VI+ (Blue line) crosses the VI- (Red line) to upwards, it's indication for price bullish.
When VI+ (Blue line) crosses VI- (Red line) downwards, it indicates the market is bearish and bearish signal confirmed.
Screenshot below.

Conclusion

I have learned more techniques about Vortex Indicator from this lecture. I have also learned its calculation and how to add in the chart and how can we get buy or sell signals from vortex indicator. Lot of things that was needed I have searched in this Homwork Task.

Thanks for the Lecture Pro. @asaj