Dear all
friends
Hi,
I’m going to
share my knowledge and experiences on Zig-Zag indicator and how to trade using
it with you all my valuable friends.
Due to no
useful content being explained across the internet on this matter, therefore,
all contents which is going to be provided is only based on my personal
experiences and it might be included some failures.
I hope all
traders to be succeeded across the market around the globe.
Be happy and
profitable
Before getting to know the whole strategy and how to take positions, firstly several points should be noted, and then the nature of the Zig-Zag will be presented, and after getting familiar with Zig-Zag, the way to trade based on Zig-Zag indicator would be addressed. I hope you all friends be patient to get the whole story understood.
Preliminarily, 3 points will be focused on which plays an important role within the story.
Knowing the trend
Money management
3-The way to raise the volume of the trade
Introduction
Hello every bodyBefore getting to know the whole strategy and how to take positions, firstly several points should be noted, and then the nature of the Zig-Zag will be presented, and after getting familiar with Zig-Zag, the way to trade based on Zig-Zag indicator would be addressed. I hope you all friends be patient to get the whole story understood.
Preliminarily, 3 points will be focused on which plays an important role within the story.
Knowing the trend
Money management
3-The way to raise the volume of the trade
Good luck
Understanding the conception of the trend
The very first in trading is knowing the dominant
trend of the market
I’m greatly pleased to quote from the book of my
beloved friend and an experienced person in the market “Duel with the market”:
“The trend is the resultant of the upward and
downward market moves which could be considered as bullish and bearish. The
trend is actually the foundation and structure of the market movement.
As you are informed of, the time frame you are going to trade in it,
that dominant trend of that TF is made of major and minor tops and troughs, so
to trade along with the trend needs to find out/realize major troughs/peaks of
that time frame itself in order to take position(s) aligned with those probably
future bottoms and tops, while most of the traders have mistaken distinguishing
minor swings or entering into position(s) aligned with minors, after the trader
got into those trades, upon the chart moves to form a minor peak or trough
against his/her trade, the trader would come under a huge psychological stress
and will be forcing the trader to close out/liquidate the trade in loss during
the minor leg. And or by placing the stop loss in an appropriate point on the
chart, would be causing the trade to be hit by the price during that minor
swing and again the market will go toward the way we have been thinking of.
Therefore, understanding the majors of the trading
time frame could help us in two different ways:
. . 1-To choose the right way to get in the market
.. 2-To pick up an appropriate place of the chart to set the stop loss
The Zig-Zag indicator is the tool that could assist us during the
correct market trend and majors identification step.
Mr. Azadi has detailed about the trend which I personally recommend you
guys has a clear sweep on that book to understand the trend specifically, this
the matter most of the traders, whether novice or experienced ones, may have a
weakness on recognizing that.
We will discuss it later on.
Good luck
One
of the reasons most of the traders end to a lot of losses and even
margin call is lack of knowledge and observing no rules on money
management.
Yet, if a trader observes money managements and how to use it, even if the trades counter to loss, it will be as much as that could be compensated easily by the next trades and the trader will be able to keep trading in a long shot.
Here, we are going to talk about one of the methods in money managements, hoping to prevent huge losses by keeping the observation of the whole story.
In this regard, we are hearing a lot being told that always risk %3 of your money to trade, but there has been a little talking about the way it is being performed.
When it is told that only %3 of the equity must be engaged to risk, it doesn’t mean that for example if you have $1,000 as your equity, you are going to take 0.03 Lot by every trade, but it do means that the amount of Lots must be specified based on the stop loss we are going to set on the trade and the loss must be %3 of the equity, not the amount of the lot in that position.
E.g.: Suppose we are going to enter to a position by %3 while having an account of $1,000.
Yet, if a trader observes money managements and how to use it, even if the trades counter to loss, it will be as much as that could be compensated easily by the next trades and the trader will be able to keep trading in a long shot.
Here, we are going to talk about one of the methods in money managements, hoping to prevent huge losses by keeping the observation of the whole story.
In this regard, we are hearing a lot being told that always risk %3 of your money to trade, but there has been a little talking about the way it is being performed.
When it is told that only %3 of the equity must be engaged to risk, it doesn’t mean that for example if you have $1,000 as your equity, you are going to take 0.03 Lot by every trade, but it do means that the amount of Lots must be specified based on the stop loss we are going to set on the trade and the loss must be %3 of the equity, not the amount of the lot in that position.
E.g.: Suppose we are going to enter to a position by %3 while having an account of $1,000.
Good luck
Up date 19/-6/2014
According to the Zig-Zag strategy, because the
possibility of raising the volume happens frequently, I felt we need to have it
noted too.
In the previous subject, using the S/L as a measure to get the volume
specified has been taught. Based on our trading strategy, now if we had a
chance to raise the volume, what are we going to do according to the money
management principles? Should we be neglecting raising the volume caused by having an open position? Because of
we already spend the %3 limit? No! In this case, if we have an open position
for example in a $1,000 account which we entered a %3 risk position and in line
with the strategy an opportunity to raise the volume is created. We proceed to risk free the position If we it was possible to do so
and the same way will be used to increase the volume, it means according to the
last S/L the volume would be set, we have to deduct the money for the S/L if
the account was not risk free, then the next volume raising would according to
the remaining of the account based on the S/L in pips of the volume which is
going to be set.
Example: Suppose that we have a $1,000 account and
there is an active open position with a $30 S/L, so the equity now should be
calculated according to the very last $970 in the account and if we are going
to increase the volume or enter into a new fresh position, and if the S/L was
50 pips and we are allowed to take maximum loss of %3 based on the same money
management rule. Now how much would be the volume to be increased?
%3 of $970 means we are allowed to increase the risk
$29 and we could set the volume on 0.05 Lot if the position has 50 pips as S/L,
and the same way will be done for the next ones.
Instead of closing out the positions which are open and
active, just enjoy taking as much as profit and be a friend of the trend and
regularly increase the volume.
Goodluck
NEW POST
The definition of Zig-Zag
The
zig-zag indicator is one that has been placed within the MT4 and its setting is
on 3-5-12 by default and definitely I can say that it is one of the most
powerful MT4’s tools. This indicator helps the trader to have realization on
the current trend of the market. Its movements are based on the
price and the volume of the market and how its moves is according to the Elliot
Waves principles. As you can see the Elliot wave recognition is so much
difficult and somehow complicated, but using this tool it is done as a piece of
cake. Each leg of the Zig-Zag is consisted of a cycle waves of Elliot waves
within the lower time frames.
One
of the points which is making a lot of problems to traders is finding out the
end a trend and when this indicator is in overbought/oversold status. That’s
because when the zig-zag’s leg appears on the chart is not portending the end
of the trend and the traced out leg keeps moving along with the price chart and
goes lower or upper till it is saturated (overbought/oversold). Trader who
knows how to use Elliot waves could easily count the waves to find out the end
of the aforementioned zig-zag’s leg. But traders who don’t, can go one time
frame lower counting that zig-zag’s leg to find out whether it is saturated.
Now,
the question which comes to our mind is that how many legs for a zig at the
current time frame is involved of a zig at the lower time frame to notice a
saturation state?
The
first point is that the lower tome frames is consisting of odd legs for a zig.
For example:
3,5,7,9.
So,
we will be looking for odd legs for a zig within lower time frames.
The
second point is that the saturation definitely takes place on one of Fibo
levels. For example:
In
trends %113 and %162 levels is more considered and for the correction waves
%50-%88 levels are considered more.
One
of the other points that could help with diagnosing the saturation status are
support and resistance levels and/or overlapping one of these two levels with
one of Fibo levels could notice us from an established zig leg as well.
But
there is one thing in our strategy and that is we are going to take positions
using signals which are generated by the indicator. And when a buy/sell signal
is appeared implicating saturation of the zig itdelf.
Trend
or correction - How to distinguish?
As mentioned above, Zigs in an upper time frame is consisting of several
Zigs in the lower time frame. During bullish trend To distinguish a trend from
a correction for an established leg of a zig, we will go to one time firm lower
first letting the very first reversal zig to be established. If the established
zig gets lower than the previous leg it means the upper time frame’s zig has
ended and we are entering a bearish
wave.
During bearish trends we will be waiting for the first top to be established in
the lower time frame, then if that leg was upper than the previous zig, means
upper time frame’s trend has ended and we have entered an upward wave.
If
the first reversal zig could not break the previous high or low, meaning our
zig in the higher time frame is going correction and the trend will get back to
its main trend after the correction is completed.
I
hope I could have learned you how the zig-zag behaves. Offcourse every
indicator and each system has its own weak and strength points. To get the best
performance out of any system, it is required to train a lot to find out those
weak and strength points.
I‘m
willing to start the next discussion on how to take position and using the
indicator as well. I hope till then everybody exercises well to more and more
realize how this indicator moves, then you will dominate fully to the zig-zag‘s
movements.
Thanking
you all
Good
luck
