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  1. #1
    Specialist Member marc's Avatar

    Question about ZigZag !!!

    Can anyone explain exactly – but still understandable – the settings for the ZigZag indicator?
    Beside mathematical explanations I haven't found something useful in the net ...

    Depht
    - is that the range/number of candles where ZigZag searches for a new high/low? ... well, and what if there is no new high/low within that range?

    Deviation
    - is the deviation, ok ... so, if I have a number of 5 here, then a ZZ from point A to point B will make a point C, if that point is more than 50% the distance of A-B, right?

    Backstep
    ???

  2. #2
    Legendry Member Michael Hodges's Avatar
    I thought I had written a review of this indicator but I couldn't find it on my computer or the BOTS website. I have reviewed a strategy that uses this indicator, it sucked but I don't really know about zig zag. I have been looking at some charts and can't really see how to use it on it's own. from what I have read so far it is used a lot with wave analysis to help determine where the asset is relation to the waves. I'll have to look into it some more to be able to give a better answer. So far, based on what my chart package is showing me the zig zag uses a retracement value to trigger a change in the indicators direction, $1 in this case.

    What charts are you using? Can you send a screen shot so I can see what you are seeing?

    heres a link to the strategy that uses the zig zag, it definately sucks.

    http://www.binaryoptionsthatsuck.com...ly-but-steady/

  3. #3
    Legendry Member willyw's Avatar
    The Zig Zag indicator filters out changes in prices that are less than a specified amount which can be configured. The Zig Zag indicator only shows significant changes thereby filering out the "noises".

    The Zig Zag indicator is used primarily to help you see changes with the most significant reversals.

    It is very important to understand that the last "leg" displayed in a Zig Zag chart can change based on changes in the underlying prices. Since the Zig Zag indicator can adjust its values based on subsequent changes in the underlying plot, it has perfect hindsight into what prices have done. Its hindsight is much better than its foresight!

    In addition to identifying significant prices reversals, the Zig Zag indicator is also useful when doing Elliot Wave counts.

    The Zig Zag indicator is calculated by placing imaginary points on the chart when prices reverse by at least the specified amount (for eg a reversal of 5%, 8%, 10%, etc....). Straight lines are then drawn to connect these imaginary points.

    More information try google on Filtered Waves by Arthur Merrill
    Last edited by willyw; 10-26-2013 at 10:22 AM.

  4. #4
    Specialist Member marc's Avatar
    Guys, many thanks for trying ... but I still don't get it what the "Backstep" value is used for

    @Michael
    Somehow I must have missed your review of this strategy! ... I have seen the strategy some months ago, and in another thread I asked Bogdan about it ... yes, it sucks ... and btw, the explanation on that site is completely weird

    I played around with the standard MT4 ZZ ... I tried some custom ZZ indicators, but there seem to be not a big difference ... there can be simply no 'Non-repainting-always-right-ZZ' ... or at least I haven't found it yet

    @willyw
    I know that ZZ is the 'grandfather' of most repainting signals/arrows out there ... so basically it's completely useless alone to predict the future ... however, if you combine more than one ZZ and use it the other way it can be useful .. like, as long as there is NO new signal of the longer ZZ you are possibly still in trend)

    It all depends on TF and ZZ settings, and for that reason I am curious, what the different ZZ settings actually do ... I didn't try hundreds of settings and the fact, that you can see the difference maybe only in realtime, makes it difficult to test

    So I thought maybe some of you have more insight here

  5. #5
    Legendry Member Michael Hodges's Avatar
    the back step is most likely the setting for filtering out the short term movements. On my package it is set at standard of $1, which means it doesn't change direction unless prices reverse by more than a dollar from the previous point. some packages can be set to a % value and/or a dollar value. Perhaps you can use the ADR to help set your zig zag to weed out average movments over time?

  6. #6
    Specialist Member marc's Avatar
    I thought, that ZZ is a standard indicator and looks the same in every MT4?

    So my version has following customizable settings:

    ExtDepth = which is likely the range/how many candles to look? ... I don't know for sure ...

    ExtDev = which is likely the deviation, or the filter ... and for example a 3 here means 30% ... lower values give more swings

    ExtBackstep = well, it seems to be some sort of filter ... different values here for the same ZZ give at *some* points other tops/bottoms

    Actually I think that the ZZ is very underrated in it's value ... because of the perfect picture it gives in history, you are tempted to use it as a reversal indicator ... and then you will take a heavy beating!
    But if you use 2 or even more ZZ the whole picture gets clearer and you can use it as a trend/swing indicator ...

    In any case you cannot use it as a stand-alone solution

  7. #7
    Legendry Member Michael Hodges's Avatar
    I just did a review and sent it to Martin, it should be up in a week or so .... in the meantime what I found is that this indicator is not really an indicator. It does a good job as a trend following device and may give a longer term signal but for the short term it is terrible. it takes a large movement for the indicator to change direction and until that move is made the current ZZ is not set. Be careful using it but definately let us know how it works, if you do choose to use it. I would suggest using it as a long term trend evaluation device and then use some other form of signal or entry determining tool.

  8. #8
    Specialist Member marc's Avatar
    Thanks Michael,
    yes, I am still playing around with but I am still not sure in which way it can be useful

    My theory so far:
    Take 2 ZZ ... a longer one and a shorter one (still experimenting with settings) ... so, if the shorter one makes points but the longer one doesn't, then you *should* actually still be in the same trend/direction ... if both meet in one point, then there is a possibly return ... but of course not necessarly at this point/candle, depending how strong the moves/the trend is ...

    Actually you could do that with the longer ZZ alone, but the picture seems to get clearer using two ZZ
    Last edited by marc; 10-28-2013 at 11:25 PM.

  9. #9
    Legendry Member willyw's Avatar
    Quote Originally Posted by Michael Hodges View Post
    I just did a review and sent it to Martin, it should be up in a week or so .... in the meantime what I found is that this indicator is not really an indicator. It does a good job as a trend following device and may give a longer term signal but for the short term it is terrible. it takes a large movement for the indicator to change direction and until that move is made the current ZZ is not set. Be careful using it but definately let us know how it works, if you do choose to use it. I would suggest using it as a long term trend evaluation device and then use some other form of signal or entry determining tool.
    You are correct Micheal, ZZ is not to be use as an indicator for entry and exit. It is use to analyze the direction of the market. For Elliot Wave fans, this is a tool for wave counts.

  10. #10
    Veteran Member hchandra's Avatar
    Zig Zag is really good to see peak and valley easily and fast,
    I don't use this indicator because Its not really hard to see the peak and valley.
    This indicator will repaint the same with fractal.

    My tips for zig zag: If you mark that extreme level with horizontal lines, most of the time you will get major support and resistance levels and you can use it to place limit order or trade it base on the trend formed.

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