What is ZigZag?

The element Zigzag is useful to detect the relevant maximums and minimums listed in the historical of a graph.

The indicator Zigzag is set up with the following 3 parameters:

  • The “Depth” is the first set up of the technical indicator Zigzag. It is the minimum number of bars without a second maximum or minimum deviation of the bar (example: if we have a maximum in candle x, and the depth is 12, it won’t be able to draw the following maximum until at least x+12 candles).
  • The “Deviation” is the percentage once the previous maximum or minimum is formed (example: if we have a stretch of 100 points from the minimum to the maximum, and the deviation is 5, it will start to draw the bearish stretch when at least 5% of the stretch is corrected).
  • The “Backstep” is the last set up and it reflects the minimum amount of bars between which the maximums and minimums can be drawn (example: if we have a maximum in the candle x, and the backstep is 3, it won’t be able to draw the next stretch of minimum until the next x+3 candles).

Visual appearance:

     

    From Tradeasy, in addition to set up the 3 parameters of the indicators, we wil be able to decide if we want the bullish and bearish stretches for purchases or sales. Moreover, we will be able to use it in both. As a shot (will give signal when it changes from bearish to bullish or the other way around) or as a filter (while it is in bullish signal it will allow purchases or the other way around).

    Considerations:

    We must consider that the Zigzag is an indicator that draws the bullish and bearish stretches while they are formed. So, if Zigzag has drawn a bearish stretch, it does not mean that the bearish stretch has ended. In the case of Tradeasy, the reading is done when it detects the changes in the direction, which is when the indicator projects them, ignoring the length that it is going to have (since it is not defined completely until there is an inverse signal).

     

    Use ZigZag for your trading strategies

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