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ZigZag

Series of lines connecting significant price top and bottoms, plotted by price. The price change parameter, 12 by default, determines the percentage for the price to move, in order to form a new leg, ignoring values under that given value. Therefore, the indicator reflects only the most significant changes in price, filtering short term noise or corrective movements inside a trend.


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(4.06KB) Version ZigZag_1

Expert Reviewed
Our rating: Rated 2 out of 5 stars
Avg rating: Rated 0 out of 5 stars
TypeTI
PairsALL
Time frames Daily/Weekly/Monthly
Test profit -1
Test max drawdown -1
Market sessionsASIA, AMERICA, EUROPE
Required experiencebeginner
CompatibilityMT4, MT5
CodeSource Code
Details
LicenseFree
Price0 USD
Price description

Updated: 09/01/2012

Screenshots and Videos

Expert Reviews

Expert Technical Review

by Alberto Muñoz - expert rating: Rated 2 out of 5 stars

How the software works

The indicator calculates the lowest price for a given period, (i.e. it finds bottoms), and removes other prices that are less than the minimum price change parameter.

Then it calculates the highest price in the same period, (i.e. it finds tops), and removes other the prices that are less than the minimum price change parameter. Finally it draws a line connecting the latest top and bottom points.

Main Settable Options

The configurable options of this indicator are:
- ExtDepth=12 Number of periods used to find new tops and bottoms from the current bar.
- ExtDeviation=5 This parameter sets the minimum deviation used to compare new tops and bottoms with the latest ones. For example, if a new low is found and is higher than the previous low on the ExtDeviation pips, then the indicator will not consider actually this new low as a low, so we will still have the previous one.
- ExtBackstep=3 Minimum amount of bars between tops and bottoms.

Technical Verdict

Zig Zag indicator can result very appealing, specially for novice traders, as it’s a very simple indicator that helps identifying the current trend. But don’t be deceived: this indicator repaints, that is, last values of the indicator may vary depending on the changes of data you analyze. Therefore, you should not try to create a trading strategy based on Zigzag.

Expert Usage Review

by Valeria Bednarik - expert rating: Rated 1 out of 5 stars

The Zigzag indicator is a series of lines connecting significant price top and bottoms, plotted by price. The price change parameter, 12 by default, determines the percentage for the price to move, in order to form a new leg, ignoring values under that given value. Therefore, the indicator reflects only the most significant changes in price, filtering short term noise or corrective movements inside a trend.

On its own, this indicator gives no trading signals, it just gives objective information regarding the chosen parameters. The best use for this indicator is to analyze historical data, as is not recommended for any kind of market forecast. Remember the last leg of the indicator is always under development and may vary depending on price changes.

When analyzing historical data, a combination of Zig-Zag and Fibonacci retracements helps traders determinate the percentage of corrective movements a certain pair could develop when moving in trend. It is also an easier introduction to Elliot Waves since it makes it easier to visually determine market movements.

Not recommended for time frames smaller than daily.

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