I tested the Vortex trading indicator 200 times.
Because my neighbor’s dog said this is the best indicator he has ever seen.
Smartest neighbor I have.
And also because I wanted to see the win rate of this trading strategy.
For science, I guess.
This is what the vortex indicator looks like.
It’s just two lines that crisscross each other from time to time.
Like my headphones.
If you squint your eyes hard enough, it looks like complete nonsense.
Spaghetti on a chart.
On this chart, the blue vortex line is called the plus line, and the red one is called the minus line.
Simple enough, right?
They measure positive and negative trend movements, or at least they try to.

When the plus line crosses above the minus line, something like this, there is a stronger upward pressure going on.
When the minus line crosses above the plus line, then there is a stronger downward pressure going on.
But then the market laughs in your face and does exactly the opposite of what this indicator told you.
But that hasn’t stopped smart people like us from blindly taking trades with this indicator.
When the vortex indicator says it’s an uptrend using the crossover, people buy at the closing price of the candle.
And then they start praying.
As for the stop-loss, we will use the Parabolic SAR indicator.
It shows dots above and below the price at a distance.
This makes it an excellent stop-loss indicator.
So, in a long setup, we will buy and set the stop-loss below the Parabolic sar indicator.
Something like this.
As for the profit target, I set it at 1.5 times the stop-loss distance or used a 1.5-to-1 reward-to-risk ratio.

But we can’t take any random crossover entry.
I mean, it would be bad manners, wouldn’t it?
If we take entries at all vortex crossovers, we might end up taking trades against the long term trend.
What’s that saying, “trend is your girlfriend” or something?

So I added a 200-period exponential moving average to the chart and only took buy trades if the price was above this moving average.

This makes sure we only take buy trades in a long-term uptrend.
Filtering out the trash.
Similarly, when the minus vortex line crosses above the plus line, we will make sure the price is below the 200-period moving average and then take a short trade.
That will make sure we only take short trades in a long term downtrend.

We set the stop-loss above the parabolic dots and use a 1.5-to-1 reward-to-risk ratio for the profit target.
I’m using that ratio because it is the best for trend-trading strategies, according to the tested data on the Trading Rush channel.
So do you think the vortex trading strategy will make money?
But the thing is, I have tested this indicator 100 times before in a mostly trending market.
In that video, Vortex had a 46% win rate with a 1.5-to-1 reward-to-risk ratio.
Since the break-even win rate with that ratio is 40%, this 46% win rate did manage to make a little bit of profit.

As you can see, the profit graph went in an upward direction.

But in this video, I want to take 100 trades in an extremely good market to see how high the win rate can go when market conditions are extremely good.
I’m going to take another 100 trades in an extremely bad market to see how low the win rate can go if the market conditions are extremely bad.
Then, we will compare it with other trading strategies we have tested so far.
Who sucks less?
But for the “extremely good” and “extremely bad” market, I went to the Gold/USD one-day time frame and added a nine-period exponential moving average to the chart.
Since Gold/USD has been moving in an excellent uptrend, even in the long run on the one-day time frame, I considered price movement that was clearly above the 9 EMA as “strongly trending.”
This is where I did the extremely good market test.

If the price was not clearly trending above the 9 EMA, or was ranging, choppy, or just bad for a trend strategy, I saw it as a “bad market” and drew red boxes around that movement.
I did the bad market test in those red boxes.
Like walking into fire.
But I only did this “good” and “bad” market filter on the one-day time frame.
The entry time frame, where I took trades with the vortex indicator, was 30 minutes.
This is where I have tested other strategies as well.
So here’s what happened when I took 100 trades with the vortex indicator in the “extremely good” market.
Well, the profit graph started to move up pretty strongly from the start.
However, the quality of trades was kind of low.
I mean, you know how some strategies give one entry point once in a while?
Well, this indicator gives like two or three entry points within a few candles.
In other words, this indicator kind of spams trades.
It gives quantity over quality.
We have seen other indicators that get a really high win rate because they managed to spam trades in a short term strong momentum.
This indicator was giving entry points similar to those spammy entries.
Because of that, it managed to win nine trades in a row and lost five trades in a row.
It made a 60% profit on the account with 1% risk per trade and without even compounding.
At the end, the vortex indicator got a 64% win rate, which is actually a high win rate compared to other strategies we have tested so far.
The profit graph went in an upward direction pretty consistently, almost like a straight line.
Before we compare it with other indicators, let’s take 100 trades in the extremely bad market.
But when I started the test, the profit graph moved in an upward direction.
A lucky start.
This only lasted for a little while because then it moved down, like a downtrend.
Back to reality.
And near the end, the profit graph moved in a sideways direction.
It lost 10 trades in a row and only won five trades in a row.

It lost 7.5% of the account, without compounding.

In the end, Vortex got a 37% win rate in the bad market, which is below the 40% break-even point.
The profit graph is slowly moving in a downward direction, but overall, it doesn’t look as bad as some of the other strategies we have seen in this testing series.
So, let’s give it a TR score or the Trading Rush score, and compare it with other strategies.
In the mostly trending market, the vortex indicator had a medium score in every category.
I mean, it had nothing special going on, just an average strategy that made money slowly.
Its total TR score was 29.3.
For comparison, the lowest TR score in the mostly good market is 14.5, and the highest score is 38.8.
But in the extremely good trending market, the vortex indicator strategy gets an 8 out of 10 in the win-rate category, which is actually a really good score.
It’s the third-highest score we have seen so far in the “extremely good market” series.
The easy-to-use score stays the same at 6.5 out of 10.
Its reliability score is 6 out of 10.
But since it spammed trades many times, it will not get a high score in the reliability category.
Since the profit graph went in an upward direction pretty nicely compared to other strategies, it gets a 7 out of 10 in the “consistency of profits” category.
That’s a nice score.
In the “quality of trades” category, it gets an 8 out of 10, which is also a high score.
But there are strategies that got a higher score, even with a lower win rate, because they didn’t give entry points in a spammy way.
That brings the total TR score in the extremely good market to 35.5.
Out of all the strategies we have tested so far, it ranks seventh from the top in the good market.
But in the extremely bad market, the vortex indicator gets a 3.7 out of 10 in the win-rate category.
The lowest score in this category is 3.3, and the highest is 4.
So, this 3.7 score is not that bad.

Still, it got a win rate that was below the break-even point, so this strategy will probably blow up your account in the extremely bad market.
The easy-to-use score stays the same at 6.5 out of 10.
The reliability and “quality of trade” score is 3.7 out of 10.
And since it didn’t make any profit, it gets a 0 out of 10 in the “consistency of profits” category.
That brings the total TR score to 17.6.
The highest score in the bad market is 19.8.
So, this vortex strategy is not the best strategy we have seen in the extremely bad market.
You can say that this strategy slowly makes money in a mostly good market with its roughly 46% win rate.
It makes money really nicely in the extremely good market.
But the reliability of this indicator is low because it gives spammy entry points.
And in the bad market, there is a high chance of losing money with this indicator, even in the long run.
It is better to use other trading strategies that performed really well in both the good and the bad markets.
Thanks for watching.