ZigZag indicator
As I know, it gives the Highest High and Lowest low of last x candles according to it's settings.
I read an article about it.
But did not understand why it is not good as an indicator to signal trades.
I read an article about it.
But did not understand why it is not good as an indicator to signal trades.
zigzag indicator is good (and there are some good EAs based on zigzag) but as far as I know - the last leg may be repainted in zigzag so it is used as the filter in most of the cases because of that.
Hi Sergey,
I see. Thank you. I think those EAs could be rather good.
Regards.
Well I doubt that the EAs based on an a ZigZag alone survive.
The "feature" of the ZigZag is to show reversals.
Therefore it "waits" certain amount of bars if the new direction is confirmed by the rules which are usually a certain amount of pips/percent in the new direction.
If the price continues in between in the old direction the rule cannot be confirmed and if there is a new high (or low) it "repaints".
So the previous high/low is stable only if the ZigZag has moved in the opposite direction by the defined amount.
So it shows only a correct picture for the prices in the past and has very limited prediction capability for new prices. (as many other indicators like fractals).
Regards
Uwe
What I like to understand is, when last leg of the zigzag starts to display?
is it after so many percent, bar, pips/point etc. in opposing direction?
I'm sure there is a formula used for it but can anybody explain accurately in layman terms please...
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How does the zigzag indicator work?
It does not seem to paint the last candles.
See red circle in my attached image.