How the Zig Zag Indicator Works The Zig Zag indicator is easy to understand and apply. Price changes below a specific threshold, normally 10% or 20%, are removed from trendlines through a filtration process. Most trading software or online trading platforms have simple input fields that allow you to set the parameters of your own Zig Zag preferences. Keep in mind that the higher you set the price change threshold, the less sensitive the indicator becomes. If you set too low of a spot, it results in an ineffective Zig Zag since not enough noise is removed. Too restrictive and you may miss profitable price trend data. Most default settings have a threshold between 8% and 15%, although this has as much to do with the individual trader’s strategy as it does with overall price movement. Trading Forex With the Zig Zag The Zig Zag tool is designed to be complementary and should not be the focal point of a forex trading strategy. It is most commonly used in conjunction with Fibonacci or Elliot Wave trading systems. Swing traders love the Zig Zag because it helps them analyze entries on possible retracements. This should translate into a more consistent application of other trade strategies. Whatever trading strategy you use, keep in mind that the Zig Zag is a lagging indicator, which means that it does not predict anything on its own. The forex market is notoriously fast-paced, so try to complement it with a system that offers leading signals if possible. Like many trading indicators, long-term trend reversals take more time but are shown to be more reliable than indicators that show short timeframes, like those of days, hours, or minutes. Many traders trade with a variety of tools. The Zig Zag indicator shows when a trend could be reversing, but the trader will compare that indication against other trading tools they use in order to execute their strategy. Common forex trading tools are volume indicators, buy/sell momentum indicators, and relative strength indicators, called RSIs. What is the difference between a Trading robot and a trading strategy? In fact, nothing, this is the same trading strategy only written in code. The robot is devoid of emotions and prejudices, so it will definitely follow the strategy. The second advantage is that you can run the strategy on history and see exactly whether it works or not and what kind of income it brings and what risks. If you want to get your own trading strategy, get one of our strategies already written in the form of a robot. Our trading strategies embodied in the form of robots:EA Long Term MT4 https://www.mql5.com/en/market/product/92865EA Long Term Mt5 https://www.mql5.com/en/market/product/92877Scalper ICE CUBE MT4 – https://www.mql5.com/en/market/product/77108Scalper ICE CUBE MT5 – https://www.mql5.com/en/market/product/77697
