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VORTEX Trading good after 100 TIMES? How to use Vortex Indicator Strategy - Forex Day Trading - YouTube
Channel: TRADING RUSH
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Unlike other indicators we have tested 100
times on this channel, Vortex is a fairly
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new indicator.
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Is this new indicator even profitable in trading?
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Lets find out.
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In this video, we are going to test the vortex
indicator 100 times, to find its real win
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rate.
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If you are watching the Trading Rush channel
for the first time, subscribe to the channel.
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We test many different trading strategies
100 times, to find their real win rates.
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After all, you don't want to risk your money
on a strategy, that doesn't even work.
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Now, the Vortex indicator has gained a lot
of attention in the recent years.
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Many traders say, that vortex is one of the
most reliable indicator, that gives accurate
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entry signals.
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Furthermore, it is a trend following system,
that is used to find the end of the pullbacks,
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and end of a trend.
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It was made in 2010, so it is fairly recent
compared to other popular indicators.
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On Trading View, this is how the Vortex indicator
looks like.
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It will come with two vortex lines, a positive
vortex line that will show the uptrend, and
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a negative vortex line that will indicate
a down trend.
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Here, the blue line is the positive vortex
line, and the red line is the negative vortex
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line.
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The Vortex Trading Strategy is simple, and
it is very similar to the Aroon trading strategy.
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When the positive Vortex line, crosses above
the negative vortex line, it's an uptrend
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signal.
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Similarly, when the negative vortex line,
crosses above the positive vortex line, it's
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a down trend signal.
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Now remember, the direction of the trend is
found, by looking at the vortex line that
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is at the top.
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When the down trend signal is generated, the
negative vortex line is actually at the top,
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instead at the bottom.
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Many traders suggest, to buy when the vortex
gives an up trend signal, and sell when a
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down trend signal is given by the vortex lines.
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Now since this is a trend following indicator,
we will use a moving average to find the direction
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of the trend.
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This will help us avoid some false signals
given by the vortex indicator.
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In this case, we will use the 200 period moving
average to find the direction of the long
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term trend.
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If price is below the moving average, we should
only take sell signals, as there is a down
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trend going on.
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Similarly, if price is above the moving average,
we should only take buy signals, as there
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is an uptrend going on.
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So, the complete vortex strategy goes something
like this.
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When the vortex gives a positive crossover,
and the price is above the 200 period moving
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average, it is a buy signal.
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Usually, I set the stoploss below the swing
low.
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But for this indicator, I found that it is
better to use the Parabolic sar, or the ATR
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indicator to set the stoploss, instead of
setting it below the swing low.
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So, in the long setup, set the stoploss below
the parabolic sar.
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Similarly, when the price is below the 200
period moving average, and the vortex gives
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a negative crossover, it is a sell signal.
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As for the stoploss, set it above the parabolic
sar.
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So, I tested Vortex indicator 100 times, here's
what happened.
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Number 1.
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I tested other indicators on the same Forex
Pair, and on the same time frame.
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While testing the Vortex indicator 100 times,
I noticed that the vortex indicator was giving
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a lot of entry signals compared to other indicators
we have tested recently.
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And on top of that, the signals that the vortex
was giving, were actually right.
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You can see how the profit graph in the Trading
Rush app, is going almost straight up.
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If you want, you can download the Official
Trading Rush app from the Play Store, or using
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the link in the description.
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Use it to test your Trading Strategy.
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It will calculate win rate and other useful
data, in just one click.
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Number 2.
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Vortex is designed to identify the end of
a pullback in a trend.
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And During the backtest, I found that the
Vortex was able to spot the ends of the pullbacks,
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and the end of the trends with a good accuracy.
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But as I took more trades, the disadvantages
of the vortex indicator started to appear.
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Number 3.
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The biggest disadvantage I found about the
Vortex indicator, is that it gives a lot of
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signals in a short amount of time.
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When the price is trending strongly, these
signals work fine.
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But when the trend was weak, the vortex was
giving a lot of false signals.
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Now, this can be easily fixed by using a fast
moving average.
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a 21 period, or a 50 period moving average
will filter the weak trends.
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But you should be very careful while using
the Vortex indicator, especially if you are
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a beginner trader.
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Since market moves sideways most of the time,
you can end up taking multiple losing trades
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in a row.
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In fact, out of other strategies we have tested
on this channel, the vortex strategy had the
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highest amount of losses in a row.
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So, if you are using the Vortex Indicator,
it's a good idea to use it with other indicators,
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or with support and resistance levels.
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It's probably not a good idea to trade using
the Vortex indicator alone.
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Furthermore, you can even use the alligator
indicator to find strength of the trend, and
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to see if the price is ranging or not.
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I have already made a detailed video about
the Alligator indicator, check it out if you
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want.
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So, after testing the Vortex Trading Strategy
100 times, the win rate I got was approximately
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46 percent.
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Which is still a profitable win rate, since
I tested this strategy with a reward to risk
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ratio of 1.5 to 1.
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But compared to other indicators we have tested
so far, it's not that good on its own.
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The indicator is fairly new, and has great
potential for improvement.
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If you can identify the strong trend, you
will find this indicator very useful.
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But like I said, this indicator had the highest
number of losses in a row in this series.
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I lost 12 trades in a row, and won 6 trades
in a row.
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In the app, I had the starting balance of
10000.
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At one point, the account was up by 2700,
but after some losses in a row, the final
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profit was 1500, which is not a bad profit
at all.
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Profit is still a profit, and in this backtest,
we were only risking 1 percent of the account
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balance per trade.
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The most you should risk as a new trader is
2 percent.
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If we had risked 2 percent per trade, we would
have made more profit than this.
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But if you risk more than 2 percent per trade,
it will be very difficult to handle losing
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trades that will come in a row, especially
as a new trader, and especially with a trading
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strategy that easily gives around 10 losing
trades in a row.
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But, the vortex trading strategy was still
able to make money in the end, because of
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a decent risk to reward ratio.
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That's all.
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Now you know a bit more about the vortex indicator.
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Like the video if you liked it.
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If you want to see other trading strategies
tested 100 times, subscribe to the channel.
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And don't forget to check out other Trading
videos on the Trading Rush Channel, to find
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their real win rates.
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Thanks a lot for watching.
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