ZigZag indicator settings
ZigZag is built into Metatrader terminals by default. It's not difficult to find. It is located in the Indicators - Custom folder.
There are only 3 columns in the settings, which are responsible for the flexibility of the algorithm. They are easy to understand and even beginners can do.
Setting up the Zigzag indicator includes the following parameters:
§ Depth is the minimum distance between extreme points in candles. Allows you to ignore sharp fluctuations in which each subsequent bar forms a new min or max;
§ Deviation is the minimum allowed movement after the appearance of min or max. The calculation is made based on the last segment. Set as a percentage. After the formation of an extremum, the next point will be postponed only after this number of percent has passed;
§ Backstep - the minimum number of bars between the nearest extremes.
Usually the standard settings are sufficient. But you can experiment and set different values for different assets. If you decrease the numbers, the program will become more sensitive and will draw more lines. As the values of the segments increase, there will be less fluctuation.
You can change the color scheme of the indicator and the time frames displayed. For example, allow work only on one time period or on all at once.
There may be no best settings for the Zigzag indicator; you always need to adapt to the market.
ZigZag operates according to the following algorithm:
1. Finds the price minimum in the Depth interval;
2. If the trend is moving down, the line moves as it passes the Deviation distance. This is how redrawing occurs when changing the settings of this parameter;
3. If the trend is moving up, the program starts looking for a maximum in the Depth interval;
4. If the price rises further, the line moves when it overcomes the Deviation interval and is redrawn again;
5. The cycle repeats.
ZigZag trading strategy indicator
ZigZag is usually used as a component of various trading systems. As we noted above, it is used for:
· determining the direction of the trend,
· turning zones,
· setting stops and profit taking levels, etc.
But there is a strategy based solely on this indicator. Let us consider, for example, two trading systems - one based on pure ZigZag and one based on its combination with other indicators.
Overall, the ZigZag indicator makes chart analysis easier by filtering
out market noise. This is an indispensable assistant for traders who trade
using waves, harmonic patterns and other figures of graphical analysis. ZigZag combines well with other techniques and can
improve any trading strategy. It is used to filter signals, allowing you to
avoid entering a trade prematurely. It is also convenient to use for setting
stop loss, take profit and transaction support. Considering the wide range of
applications, we can say for sure that this indicator will be useful to every
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