ZigZag indicator tutorial – Key takeaways
The ZigZag indicator is primarily a tool for identifying trends through calculating highs and lows. It should not be used as a direct tool, implying that the price will go to where it has been before. It’s not that kind of tool. The only value that ZigZag gives us as traders is a clearer vision for future analysis.
As mentioned above, the ZigZag indicator cancels all market noise besides what’s most important for the trader. All the candlesticks will be “straightened” out for you to see the momentum of the movement
. The steeper the rise or fall, the larger the momentum was. This “simplification” of the chart helps with using other tools as well.
The one thing this ZigZag indicator tutorial should show you is that using this tool is very hard and sometimes requires complex mathematical calculations to work as it’s supposed to. Therefore, using the automated calculator within the indicator itself is usually the most recommended option.
FAQ on ZigZag indicator
How do I download the ZigZag indicator?
This depends on which software you are using. For the ZigZag indicator MT4 download, it’s best to go to the MetaQuotes marketplace and download one for free. With cTrader, all you have to do is go to the cTrader website and find the software on the marketplace as well.
Most of the trading software comes with a pre-installed tool. For instance, you're immediately getting a stock MT4 ZigZag indicator upon downloading the software, so you may not have to specifically install one at all.
What is the ZigZag indicator formula?
The ZigZag formula or algorithm is:
If %change>=X,plot ZigZag
HL stands for High and Low prices during trading sessions
%change is the minimum price movement you would like to track
In terms of retrace and LastExtreme, they’re used for tracking all the retracements and the repetition of those retracements when using the Forex ZigZag indicator.
What’s the difference between ZigZag and Donchian channels?
The ZigZag indicator showcases the trends that the asset has gone through, therefore its lowest and highest price points. Although the Donchian channel does the same thing, it adds a little more to the visual aspect, helping the traders understand the actual growth of the financial asset they are tracking.
How to use ZigZag indicator in Forex trading?
ZigZag indicator is a lagging indicator, which means that it's not going to give you trading signals. It makes reading price charts easier. ZigZag helps to determine price swings highs and lows. It's best to use the indicator in combination with other indicators and simple trendlines. ZigZag is a good indicator for analyzing past performance, however, market conditions often change and past performance may not help traders plan future trades. ZigZag is usually used in trending markets by trend traders.
What is ZigZag indicator?
ZigZag indicator is a lagging indicator displaying highs and lows in a way that it becomes easier for traders to visualize price movements on charts. ZigZag indicator is typically coupled with other indicators. The indicator is generally used in trends to determine trend direction. Higher highs and higher lows on ZigZag indicator means that the price is moving upwards. Lower highs and lower lows means that the trend direction is downwards. The indicator helps traders to determine trend direction.