Rashad

Vortex Indicator with Thresholds Defined

A problem I noticed with the built in Vortex indicator was that it didn't include any defined thresholds that are important to understanding how to read the vortex indicator. So I modified the vortex indicator in order to have the thresholds built in so you don't have to draw horizontal lines on your chart.
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//Vortex indicator with defined thresholds created by Rashad
study(title = "Vortex Indicator With Thresholds defined", shorttitle="VI")
period_ = input(7, title="Period", minval=1)

VMP = sum( abs( high - low[1]), period_ )
VMM = sum( abs( low - high[1]), period_ )
STR = sum( atr(1), period_ )
VIP = VMP / STR
VIM = VMM / STR

plot( VIP, title="VI +", color=fuchsia, linewidth=2)
plot( VIM, title="VI -", color=aqua, linewidth=2)
bandy1 = hline(1, color=gray, linestyle=dashed)
bandy2 = hline(0.9, color=orange, linestyle=dashed)
bandy3 = hline(1.1, color=orange, linestyle=dashed)
bandy4 = hline(1.3, color=red, linestyle=dashed)
bandy5 = hline(0.7, color=red, linestyle =dashed)
I compared the Vortex indicator several times with the Directional Movement Index (DMI) by Welles Wilder, and although the authors of the Vortex indicator claim that their indicator is better, my conclusion is that the DMI is superior. At least I recommend to use both the DMI and the Vortex at the same time for more confirmation of trends.
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Rashad ChartArt
Maybe, but defining thresholds on the Vortex indicator makes it much easier to read, and should be useful when comparing it to the DMI.
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ChartArt Rashad
What I wanted to say is: Please define thresholds on the DMI indicator, too - to make it much easier to read, as well.
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Rashad ChartArt
Normally you would have a center line at 25 when using DMI, however I am going to research DMI heavily and do some back testing to see if I can come up with some reliable thresholds in DMI.
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ChartArt Rashad
When you back-test the DMI, you can also compare the Vortex with the Trend Continuation Factor and add a threshold for that one, too :D

Trend continuation factor, by M.H. Pee
Reply
ChartArt ChartArt
You can add your thresholds to the Directional Movement Index (DMI) using one of these codes:

DMI by Chris Moody
CM_DI_Plus_Minus


DMI by TheLark
The Lark: Directional Movement Index
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