Forex Questions and Answers - FXAnswer

Zig Zag is trend following indicator that helps define what the trend has been, and can be used as a significance test to help determine when changes in the current price might indicate when the trend of price might be changing.

by

Lisa

1 year ago

The zig zag is a very basic indicator which attempts to reduce the amount of "noise" in a trending security. The aim of the zig zag indicator is to assist traders with staying in a winning position and avoid the urge to close positions on the minor reactions, which are commonplace in the market. Users can set the percentage move that will generate a change in the zig zag signal. The default value for the zig zag is 5%. This means that any counter move less than 5% will not generate a signal on the chart. Hence a trader will be able to ignore the countless minor moves that have no affect on the primary trend

by

Harold

1 year ago

Like many trend following indicators, the disadvantage is that the result is based off past price history and doesn't change direction until a certain move occurs. Given the lag, many traders will want to use the Zig Zag indicator to confirm the direction of the trend rather than timing an entry/exit.

by

thegreeks

1 year ago

Zig Zag demonstrates past performance trends and only the most important changes. It filters out all changes less than a specified amount. First of all, the Zig Zag indicator is used to help you watch changes by highlighting the most essential reversals. Note that the last segment in a Zig Zag chart can change based on changes in the basic plot, where price is just one of the examples.

Don't develop a trading system based on the Zig Zag indicator, as it to be used to highlight historical patterns. A change in a security's price can change the indicator's previous value. As the Zig Zag indicator adjusts its values based on subsequent changes, it has wonderful estimation of previous prices.

To measure the Zig Zag indicator place imaginary points on a chart when prices reverse by at least the specified amount. To connect the imaginary points use straight lines. Ignored any changes in prices which are below the certain amount.

Source(s):

http://www.forexrealm.com/technical-analysis/ technical-indicators/zig-zag.html.

by

Suneetha

1 year ago

The Zig-Zag indicator is extremely useful for determining price trends, support and resistance areas, and classic chart patterns like head and shoulders, double bottoms and double tops. The Zig-Zag indicators uses both swing highs and swing lows in its calculation:

Swing Highs: When a price (usually close) is both higher than the price previous to it and after it.
Swing Lows: When a price is both lower than the price prior to it and lower than the price following it.
The Zig-Zag indicator can use both percentages or points in its construction. To construct the Zig-Zag indicator, there must be a certain percentage or number of points between a swing high and a swing low before a line will be drawn.
Zig-Zag indicator is extremely effective at uncovering stock cycles while screening out short-term price noise.

Source(s):

http://www.onlinetradingconcepts.com/ TechnicalAnalysis/ZigZag.html.

by

Suneetha

1 year ago

The Zig Zag indicator attempts to plot only the most significant market turns, and is used by many traders to try and find the reason why markets turn. As the last 'leg' in th ezig zag plot can change based on current market action, it has 'perfect 20-20 vision', and you should be wary of this.

To calculate the zig zag indicator, plot only those points on a chart where prices reverse by a user-specified amount (e.g. 5% or 8%). Then connect these points with straight lines. The zig zag indicator is virtually useless in day trading.

Source(s):

http://www.surefirething.com/indicator-zig- zag.html

by

Kingpin

1 year ago

The Zig-Zag indicator is extremely useful for determining price trends, support and resistance areas, and classic chart patterns like head and shoulders, double bottoms and double tops. The Zig-Zag indicators uses both swing highs and swing lows in its calculation:

* Swing Highs: When a price (usually close) is both higher than the price previous to it and after it.
* Swing Lows: When a price is both lower than the price prior to it and lower than the price following it.

The Zig-Zag indicator can use both percentages or points in its construction. To construct the Zig-Zag indicator, there must be a certain percentage or number of points between a swing high and a swing low before a line will be drawn.

Source(s):

http://www.onlinetradingconcepts.com/ TechnicalAnalysis/ZigZag.html

by

Kingpin

1 year ago

Zig Zag indicator demonstrates past performance trends and only the most important changes. It filters out all changes less than a specified amount. First of all, the Zig Zag indicator is used to help you watch changes by highlighting the most essential reversals. Note that the last segment in a Zig Zag chart can change based on changes in the basic plot, where price is just one of the examples.

Don't develop a trading system based on the Zig Zag indicator, as it to be used to highlight historical patterns. A change in a security's price can change the indicator's previous value. As the Zig Zag indicator adjusts its values based on subsequent changes, it has wonderful estimation of previous prices.

To measure the Zig Zag indicator place imaginary points on a chart when prices reverse by at least the specified amount. To connect the imaginary points use straight lines. Ignored any changes in prices which are below the certain amount.

Source(s):

http://www.forexrealm.com/technical-analysis/ technical-indicators/zig-zag.html

by

Kingpin

1 year ago