The Zig Zag Arrow Indicator For MT4
Table Of Contents:
- The Zig Zag Arrow Indicator For MT4
- PARAMETERS
- ZIG ZAG ARROW INDICATOR - TRADING IDEAS
- ZIG ZAG ARROW INDICATOR + KELTNER CHANNELS
- WHAT NOT TO DO?
- PROS & CONS OF THE ZIG ZAG ARROW INDICATOR
- BOTTOM LINE
Zig Zag Arrow indicator for MT4 is a technical indicator which measures the swing highs and lows of an asset in the market. This indicator is also a means to filter out smaller price movements in an ongoing trend. By filtering out minor price movements, Zig Zag gives the ability to see the bigger picture on all the timeframes. This makes it easier for traders to spot a significant trend.
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Alerts In Real-Time When Divergences Occur
If you set the Zig Zag at 20, it would ignore all the major price movements that are less than 20%. This versatile indicator helps traders to spot top & bottoms, entry points, patterns & channels, Harmonic patterns and Fibonacci levels. This is a very sensitive indicator, so it is always recommended to use it by combining with other reliable indicators in the market.
PARAMETERS
Every indicator has its parameters, and by changing these parameters, traders can improve the accuracy of the indicator. Below are the parameters of the Zig Zag Arrow indicator for MT4 that you need to figure out.
Depth – Depth refers to the number of previous candles indicator will look. To get smooth signals, we suggest you make sure you have enough depth.
Deviation – Deviation refers to the percentage in a price change, which takes to change the trend line from Positive to negative.
We suggest you try different parameters until you find the right ones according to your trading style. Try to use the broader parameters to find the correct swing high and swing low.
ZIG ZAG ARROW INDICATOR - TRADING IDEAS
Zig Zag indicator does not predict the future market movements. It only identifies the plotted swing highs and lows, which helps us to find out the significant support and resistance areas. Zig Zag indicator lines help us to spot the considerable reversal patterns, such as double bottoms and head & shoulder. To get genuine and accurate trading signals, traders can combine this indicator with other credible indicators in the market such as RSI, MACD, Keltner Channels etc.
In this article, we have paired the Zig Zag Arrow indicator for MT4 with Keltner Channels to generate buy/sell signals.
ZIG ZAG ARROW INDICATOR + KELTNER CHANNELS
Both Zig Zag indicator and Keltner channels are popular indicators in the trading community. In this strategy, we have paired both of them to raise the accuracy level of our signals. While using Keltner channels indicator, it is an indication to buy when the price hits the lower channel and sell when the price hits the upper channel. Most of the traders know when to use the indicators in the market, but very few know when not to use them. In this article, you will know when and when not to use this strategy.
Buy Trade:
In a bullish market, when the zig-zag indicator hits the lower channel of the Keltner, it can be considered as a buy signal. Hold your trade until the Zig Zag indicator gives a double top in the market. This strategy works well on all the timeframes, but it's not a consistent way to trade all the timeframes. If you are an intraday trader, use this strategy on lower timeframe such as 60 & 15. If you are a positional trader or investor, then trade on the daily or weekly timeframe.
In the above chart, AUDCAD was in a strong uptrend, and our strategy gave two strong buy signals. The most significant advantage of going with a strong uptrend is that you can comfortably ride the longer moves in the market.
Trade Exit:
Above screenshot shows the result of the AUDCAD buy. As you can see, after the strong buy move, zig-zag prints the double top at 0.9393. This means it's the perfect time to exit the long trade.
In the above chart, it is evident that the market is completely reversed to sell-side after the formation of a double top. Hence the formation of double top and bottom in the zig-zag indicator is very powerful and reliable, especially when used in conjunction with Keltner indicator.
Sell Trade:
For the sell-side, find out the strong selling trend in any asset class. Then wait for the Zig Zag and price action to hit the upper channel of the Keltner in order to take the sell trade.
The image above is the CHFJPY 15 minute chart. The market is in a downtrend, which means we only have to look for sell opportunities. As you can see, around 109.03 market generates a potential sell signal. You can go short here. Then our Zig Zag line prints the double bottom at around 108.45. This is a strong indication for us to close the trade.
After the double bottom, the market trend is changed from sell to buy. Hence we can say that this pattern helps us in identifying the trend reversals in the market. However, it is not recommended to use the reversals alone to hit buy/sell. Always make sure to pair it with other credible indicators to identify accurate trading signals.
WHAT NOT TO DO?
By now, we understood when to take the buy and sell trades in the market using the Zig Zag Arrow indicator for MT4. This strategy works most of the times. But in an active trending market, traders take counter-trend trades and often gets stopped out. As a result, they think that this strategy is not good enough to give consistent winning trades for them. Instead of doubting their strategy, if traders learn to trade only with the trend and avoid the counter-trend moves, their strategy will give them consistent winning trades in the long run.
PROS & CONS OF THE ZIG ZAG ARROW INDICATOR
One major pro of the Zig Zag indicator is that it prints powerful patterns in the market. Most of the time, these patterns work very well. Especially double tops and double bottoms are the ones that work 9 out of 10 times.
One significant consideration of the Zig Zag Arrow indicator for MT4 is that it is a laggard indicator. It means, just like other lagging indicators, it gives buy and sell signals when the majority of the trend has already occurred. Once the trend is at its peak, the Zig Zag line appears. Hence, while using this indicator stand-alone, traders can only confirm the direction of the market rather than attempting to take the trade.
BOTTOM LINE
The Zig Zag Arrow indicator for MT4 does not hold predictive power. The indicator line reacts only when the price moves a certain percentage in the market. Remember that the Zig Zag line is not permanent. It changes when price changes its direction, and draw a new line. Along with the potential trading signals, this indicator helps to eliminate the noise in the market. As discussed, it is always recommended to use this indicator in a trending market and not in the sideways market.
Hope you had a good read. Make sure to include this indicator in your daily trading activities. Happy Trading.
