![]() The zig zag is an essential tool of identifying these positions.Įntry and exit points – The zig zag indicator is an important tool that can be used to identify entry and exit points.Ĭonfirmation of trends – Zig Zag can also be used in combination with other indicators to identify and confirm trends. The principle is that the price of an asset moves in five motive waves and three corrective waves. A top position is a position which tells time to short while a bottom is a position that tells time to short.Įlliot Wave Analysis – The Elliot Wave Analysis is an important technique that is used by traders. ![]() Identifying tops and bottoms – The principle of the zig zag indicator is to identify significant swings. The Zig Zag indicator is used for a number of reasons. When you should include the Zig Zag Indicator in your Trading Strategy The depth is the minimum of the candles on which the zig zag will not make the maximum and minimum if the conditions of the first number are necessary for the construction to happen.įinally, the backstep is the minimum number of candlesticks between highs and lows. This means that price actions that are less than 5% are ignored. ![]() The deviation is the minimum value of the number of points that is expressed as a percentage between the highs and lows of neighbouring candlesticks. ![]() The chart below shows the same chart as above but with the deviation at 10. For example, when you add the deviation, the lines will be spread relatively more. The numbers are also in percentages.Ĭhanging the deviation will have an impact on the appearance of the Zig Zag line. As with all indicators, these numbers can be tweaked to suit your trading style. The default numbers of the three are 12, 5, and 3 respectively. ![]() The default settings are usually the depth, deviation, and backstep. Example of Zig Zag Indicator The Three Zig Zag Indicator Settings ![]()
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