Vortex - MetaTrader 5 Script - MQL5 #20462 | Forex Indicator Download - MT4/MT5 Resources

According to the original description by the authors of the Vortex indicator (Etienne Botes and Douglas Siepman):

After a thorough study of technical tools, we concluded that the concept of Directional Movement Index (DMI) provides the most accurate method of identifying the direction of market trends or significant price movements. The concept of DMI was best defined and described by J. Welles Wilder in his 1978 classic book "New Concepts in Technical Trading Systems". The result of his work is the now famous and efficient indicator, which inspired us to create the Vortex indicator.

To better understand vortex indicators, we must describe directional motion. The idea is that the individual relationships between price bars provide clues to the trend or market direction. “Orienteering is the largest part of today’s range that is outside of yesterday’s range,” Wilder concluded.

Positive movement is simply the portion of a price bar that is above the previous bar's high. Negative movement is the portion of the price bar below the previous low. The smaller of the two values ​​is assigned the value zero. Larger numbers are used to indicate whether the market is rising (positive) or falling (negative). In the case of an internal bar (if neither the high nor the low is higher or lower than the previous bar), zero values ​​are assigned to the positive and negative directions.

The result will be a seemingly random string of consecutive zeros or positive numbers placed in the two columns assigned to positive and negative moves. However, if the two strings of numbers are summed after 14, 21, or 55 periods, the larger value can indicate the overall trend. If you continue this process, the result can be seen on the chart as two lines representing positive and negative movement. They will cross over and over during trend changes and diverge more and more widely as the trend gains strength. This is the basis of Wilder's DMI.

This article appears in the January 2010 issue of TASC.

We might add that Vortex seems to work well on all timeframes and can be used in fairly reliable patterns to identify trends.

Attachment download

📎 vortex.mq5 (7.54 KB)

Source: MQL5 #20462