If you ever traded in the financial markets, you should know that the success depends on the ability to predict the trend. The same works for binary options. Unfortunately, many traders have difficulties with building a trend and detecting the reversals. After all, the market is like an ocean with prices as waves.
You can use the Zig-Zag as a reliable indicator to accurately determine min and max prices. It will help you to effectively build a trend and determine the overall movement. You can find the Zig-Zag on many platforms. It is available from the Pocket Option Broker. The Zig Zag indicator plots points on the chart whenever prices reverse by a percentage greater than a pre-chosen variable. Straight lines are then drawn, connecting these points. The indicator is used to help identify price trends. It eliminates random price fluctuations and attempts to show trend changes. By filtering minor price movements, the indicator makes trends easier to spot in all time frames.
The external appearance and setting indicator
Zig-Zag is an indicator that is displayed directly on the price chart.
Look for it in the Menu under Indicators available from the Pocket Option. You can use your own setting or use a recommendation.
Look at the “broken line” on your chart: the angles coincide with the peaks of price fluctuations. The Zig Zag ignores insignificant price changes which can be attributed to the market noise.
The Zig Zag indicator traditionally has a set of 2 parameters: Deviation and Depth.
The Deviation is recommended to always set at level 5. It is the standard settings of the terminal.
The Depth can be changed depending on the selected timeframe.
For example, lower time intervals require 12, medium – 10, and 6 or 8 is more suitable for long-term trading.
How To Use Zig-Zag Indicator in Trading
Even though the Zig Zag Indicator is an awesome tool, it is not used to find the perfect point for the purchase deal. The line does not intersect anything or delivers other otherwise other signals except for zigzags.
However, Zig-Zag is one of the best advisors for determining the direction of the market and its possible reversal.
We recommend using the Zig Zag Indicator in the following cases:
- To build trend lines and determine the price channel.
Connect the peaks of the zigzag in a straight line and search for the market trends. It will help you to avoid beginners’ mistakes. Beginners often mistake fluctuation caused by market noise.
- To determine the wave structure of the market.
If you are not a new trader, then know something about the Eliot Waves. According to it, a long (upward) movement, as a rule, consists of 5 waves, and a short (downward) movement has 3 waves.
Zig – Zag is often used for technical analysis. It helps to determine a trend better than using a linear graph.
To tell the truth, the Zig-Zag indicator from Pocket Option is not a magic wand. Nevertheless, it will help you accurately determine the direction of the market and reversals. By using it, you will become more efficient. The Zig Zag indicator is used to determine the positioning of each wave in the overall cycle. Traders can experiment with different percentage settings to see what gives the best results. Stocks have their own patterns, so traders need to optimize the Zig Zag indicator’s percentage setting to suit those securities.