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The ZZ indicator for Forex
Indicators on the foreign exchange market can be divided into groups according to different principles, but today we look at a popular algorithm that is used by many traders. We will focus on the ZZ indicator, better known in Forex as ZigZag.
There are various modifications of the algorithm, but often the final product differs only slightly from the progenitor, or even only has features of a graphic nature.
The standard ZZ is in the terminal MetaTrader4, and one of the modifications, which will also be discussed in this review, You can download below. Now go to the case, namely, to the description of the algorithm.
Get acquainted with the indicator ZZ
ZigZag is a straight line connecting the extrema of the price chart. The program generates the trading signal looking for entry points in the market and so on. The indicator just shows us the location of important local minima and maxima, and we have the ability to adjust the program settings, setting the search rules.
Now go to the settings, which is not so much:
• Depth - the number of bars of the current timeframe, which will not be a new fractal;
• Deviation - the number of points at which the market will have to move away from the former fractal, that would be on the chart there are new;
• Backstep is the minimum number of bars between adjacent extrema.
You can configure an indicator that it will be even a slight extrema is noted on the chart, or Vice versa, will be to show only the relevant fractals. Just a few minutes to experiment with the indicator ZZ to understand which variables affect the informativeness greater extent.
ZigZag helps you quickly assess the market situation, to find important price levels and all this is not "by eye", and objective manner. Now let's see what ZZ standard different from its "brothers".
The indicator ZZ - available options
Based on the algorithm of the ZigZag has already created a big number of various Forex programs. As a rule, their names still appear or "zigzag" or "zz". As a test this time will be the indicator ZZ SR TL:
As you can see, there are no slanted lines, which in the standard indicator connecting the local maxima and minima, they were replaced by horizontal stripes, which act as price levels. Essentially, a horizontal strip through the same points, which were connected to the standard ZZ, of course, if we talk about the same settings in both programs.
Perhaps a variant of ZZ SR TL more like those traders who have previously used a regular ZigZag, but had to imagine using each extremum is level.
There are other modifications, but they all either contain an additional variable, allowing you to extend the functionality of the algorithm, or just a little different are well-known programs for graphics. After reviewing several options, I have not been able to find anything that could be called fundamentally improved in comparison with the standard ZZ.
Now, to trade with the indicator ZZ. As mentioned above, any signals the program does not. Can we use ZigZag to search in an objective manner on the chart of price levels. However, you need to consider a very important point - not yet formed angle, the data can be redrawn.
For example, the algorithm has already depicted on the chart, a local minimum, and now the market price increases. Based on the parameters of the algorithm, at some point you'll see a line of growth from the last local minimum, but it can disappear if the price came back down again.
Still recommend that these two indicators:
• Scalper Dream
• Trend Filter
Thus, to take into account the extremes of the designated Forex indicator ZZ, you need to wait until their final formation. This will represent the angle on the chart when the market can no longer change their values, but only able to affect the formation of new lines.
In my opinion, it makes no sense to look for some derivatives of the indicator ZZ, as they are not likely to be more comfortable or effective. Standard ZigZag copes with its tasks, I recommend a little only to watch the development of events that would fully understand the principle of redrawing, as well as to understand when the algorithm will not change their values on the chart.
|Category: Binary options | Added by: (07.11.2017)