Use Zig Zag Indicator In Combination For Greater Profits -

Use Zig Zag Indicator In Combination For Greater Profits

Binary Options traders can seek the help of various technical indicators in the course of their trade. One among the various binary options tools used is the Zig Zag Indicator. This simple indicator helps to get a long term perspective of the asset in question and obtain a ‘trend following’. It gives best benefits if used in conjunction with another suitable indicator.

What Exactly Is A Zig Zag Indicator?

The Zig Zag Indicator is a series of straight lines joining set of points based on the type of charts used. If dot, line and mountain type of charts which are based on closing prices are used then the Zig Zag line will also be based on closing prices. Charts such as OHLC etc which are based on high/low range of asset will lead the Zig Zag line to join the high/low range of asset. The Zig Zag line obtained in this context will be increasingly responsive to price movements as compared to those based on the closing prices.
The Zig Zag indicator can be used in trade of all assets. Its direction changes with a large movement in the underlying asset. Due to this factor, it can be said that the Zig Zag indicator has more of historical importance and may not be of much use to the short term traders.

How Do You Use It Profitably?

The Zig Zag indicator is simple to use and can be found in the Metatrader platform. It is most helpful to novices at the start of their trading journey. It provides an insight into the highs and lows of the market. The most profitable way to use it, is to combine it with another technical indicator such as Moving Averages, Commodity Channel Index, Stochastic or the Relative Strength Index set to required periods.
Greater results can be obtained by use of this indicator till the trading assets are mostly ranging. In case of occurrence of breakouts, it pays to search for new assets that are still ranging. At the same time factors like proper risk management, support and resistance assume great importance for obtaining profitable results.

Benefits Of Zig Zag Indicator

Various benefits are obtained by including the Zig Zag indicator as one of your technical indicators for trade in assets. Some of them can be listed in brief:

  • Simple indicator, easy to follow
  • Eases out short term fluctuations
  • Capacity to ascertain support and resistance
  • Forecast trend reversal
  • Large movements in asset are brought out
  • Reliable tool for application in wave analysis as a concurrent indicator

Due to its tendency of repainting, it has to be combined with other indicators so that greater benefit can be obtained from reversal signals provided by it. Moreover, it needs large movement in asset for it to change and does not serve the purpose of being much of a signal provider. Hence, it cannot be relied for call/put options signals

Summarizing

The Zig Zag indicator is one of the good binary options indicators. Though it may not be useful to short term traders, analysis of the peaks and troughs of the Zig Zag line on a long term basis gives a definite indication of the trend. So it can be effectively used to ascertain the trade direction and simultaneously another suitable indicator can be used to ascertain trade entry.

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