The best Zig Zag indicator for MT4
The zig zag indicator is a widely used tool in the trading community. It is rather simple in its approach and as the name suggests, it plots the highs and lows in price.
Download the best Zig Zag Indicator:
As one might already know, price never moves in a straight line. It always tends to extend or retrace the previous move. In such cases, the zig zag indicator is a versatile tool that shows you exactly that.
Various trading strategies have evolved with the zig zag indicator and one can use it to compliment any trading strategy. There are many common uses of the zig zag indicator for the MT4 trading platform.
The best zig zag indicator is a slight modification of the default zig zag indicator available on the MT4 platform. In this article, we take a look at the features and functionality of the best zig zag indicator and how you can use it in your trading, instead of the default zig zag indicator that is available.
How does the zig zag indicator work?
The zig zag indicator is a rather simple tool used to identify the highs and lows on a price chart. Whenever prices reverse by a certain percentage after forming a high or a low, the lines are drawn connecting these points.
Default zig zag indicator, MT4
The Zig zag indicator is commonly used to identify the trends on the price chart. One of the benefits of the zig zag indicator is that it removes the randomness of the markets to a certain extent and shows the trends via the highs and the lows.
You can use the turning points in price to draw trend lines as well which can be a lot more easier. However, the effectiveness of the trend lines basically depends on the settings of the zig zag indicator that you use.
As one might know, in an uptrend, price tends to plot higher highs and higher lows. Likewise, in a downtrend, price plots lower highs and lower lows. Thus, using the zig zag indicator one can get a view of the markets.
Typically, the zig zag indicator has some settings. One of the settings is the percentage reversal. Thus, if you set this to 5, which is often the default setting, the indicator connects the previous high or low to the current high or low when price reverses 5% from the high or the low.
There are many uses of the zig zag indicator. For example, it can be used to understand the Elliott wave theory and can show at what point the price is in the overall cycle of the wave theory.
The ability to change the settings allows traders to experiment with the zig zag indicator and the changing variables can show the indicator plotting the zig zag lines rather differently. Other uses include chart patterns and so on.
The zig zag indicator is also a useful tool in spotting support and resistance levels. But this is rather obvious considering that the indicator works with highs and lows and price reversals.
Therefore, if you are looking for a tool that can easily allow you to identify the support and resistance levels, the zig zag indicators are ideal as they can pin-point the reversals in prices. One more use of the zig zag indicator is that it can be used to identify potential reversal points by using the Fibonacci retracement levels.
What is wrong with the default zig zag indicator?
The MT4 trading platform offers the default zig zag indicator. However, some traders claim that the indicator does not do a good job for it and thus make a case for using another “improved” zig zag indicator.
This is something that you as a trader should find out for yourself and then download this indicator. The differences aren’t that big and in terms of configuration, there is nothing different.
It is quite likely that those who proclaim that the default zig zag indicator does not work correctly are often using the wrong settings and expecting different results from the default indicator.
Still, it is a matter of personal choice for many. In this article, we take a look at the customized zig zag indicator, which is considered to be the best zig zag indicator for traders. It is free of cost to download and apply to your charts, so there is no harm in trying out the indicator.
There is not much of a difference in the settings between the default zig zag indicator and the best zig zag indicator. The benefit of course comes from the fact that the best zig zag indicator offers some additional information for the trader.
How to add the best zig zag indicator to MT4
Once you download the file, you can move it to your MQL folder and into the indicators sub folder. Then, head back to your MT4 terminal and in the navigator, refresh the indicator list so that the MT4 terminate will update the list.
From here, locate the Best Zigzag indicator and add it to the chart of your choice.
To configure the settings, click on the configuration as seen below.
Best zig zag indicator configuration
The settings, as you can see are simple.
- Deviation: This is the setting that allows you to set the minimum number of price bars for the high or the low to form.
- Deviation: The deviation setting allows you to set the number of pips for which the indicator can re-draw the highs and the lows. This is also known as the percentage which we covered previously
- Backstep: This setting allows you to set the minimum number of bars between which the indicator can look for a high or a low
- Font size/color: These allow you to set the font size and color for the labels
- Show percent: If set to true, it will show the percentage extension from the previous high or low
Once the settings are configured (or you can just use the default settings of 12, 5, and 3). The next chart below shows how the best zig zag indicator looks like once plotted on your chart.
Best zig zag indicator on MT4
As you can see, the main difference is that the best zig zag indicator shows additional values such as the number of pips by which price has retraced or reversed from the previous low. By setting the percentage setting to true, you can also see the percentage by which price as reversed from the previous low or the high.
Some traders might find this information to be useful, especially if you are trading with Elliott wave theory or with harmonic trading patterns.
Drawbacks of using the zigzag indicator
It should be mentioned that the zig zag indicator does not predict future trends in price. It is lagging in nature to a certain extent. Therefore, based on the existing patterns, you can potentially use methods such as the Elliott wave theory, or use the indicator for identifying support and resistance levels which will show you what price could do in the future.
This makes the zig zag indicator also its drawbacks. Unlike other indicators which can predict what price will do, such as momentum oscillators or even moving averages, that is not the case with the zig zag indicator. Traders need to base their own technical analysis.
In such cases, the zig zag indicator acts as a tool to fall back upon, but that is all it can do. Traders can build various trading strategies however using the zig zag indicator tool.
In conclusion, the best zig zag indicator is a modified version of the regular or the default zig zag indicator. The additional settings allow you to configure the indicator and to show you the values.
The use of the best zig zag indicator is pretty much the same as you would use the regular zig zag indicators. Traders who find the additional labels to clutter the charts can also set them off. However, the pip change cannot be hidden. This is something that comes by default with the best zig zag indicator.
As outlined earlier in this article, the best zig zag indicator can be put to use in multiple ways. By changing the default configurations of the indicator, you can see that the indicator will redraw itself.
An important point to mention is that the best zig zag indicator also repaints. Some traders tend to look down upon an indicator that repaints. However, one should know that an indicator repaints only to adjust to the evolving price action. This is fairly common.
You should therefore wait for price action to at least plot the next high or low before you can begin to analyze and where you need to take into account the recent high or low that is plotted.
Overall, the best zig zag indicator is worth giving a try as it can show you the additional information that is lagging with the default zig zag indicator on the MT4 trading platform.