In the world of trading forex, there are so many indicators or tools that can help you, as trader, to read and predict the market. As we all know, the market itself is very volatile. It can be changed at any time. That’s why PAMM trader need to be very smart in predicting the price movement in order to make a big profit.
Zig Zag indicator is one of the trend indicator. It means, this indicator can be used in the trending market. Zig Zag helps trader to identify price changing by showing the most important reversal point. In the other words, Zig Zag is used to show High and Low signals based on the current trend. If the Zig Zag line climbs up, it means the market is in uptrend. While if the Zig Zag line falls down, it can be considered as a signal of the downtrend market. As PAMM trader, you are suggested not to use this indicator alone on its own right. Instead, you must combine it with other trend indicators such as Moving Average.
Have you ever tried to do a zig zag-walking? How it feels? Yes, you may feel uncommon, a little dizzy or got tempered by someone else who is bothered by what you are doing. Right? It goes the same way when we use Zig Zag indicator as the only tool in our trades. The un-patterned moves of this indicator will be very confusing. This is the reason why we are suggested to use Zig Zag in conjunction with other indicator when reading the market.
There are two different ways to analyze Zig Zag indicator. They are: trend-following signal and trend-reversing signal.
1. Trend-following signal
If the uptrend occurs more than 20 candlesticks, it means a High signal and if the downtrend occurs more than 20 candlesticks, it means a Low signal. You can combine Zig Zag indicator with other tools such as Bollinger Band or MACD.
2. Trend-reversing signal
If the Zig Zag line falls down and then turns up, this means a High signal. When Zig Zag line climbs up and then turns down, it means a Low signal.
If you are a newbie in trading forex, it’s very recommended for you not to take the trend-following signal since it’s too risky to follow the trends which can be changed at any time. This will make a beginner with a few experiences in reading the market, get wrong signals. Instead, you are suggested to take the trend-reversing signal. By doing more and more trades, you will be able to read the market better each day. So, never stop learning and doing your best.
Happy trading in PAMM Investments !
Don’t forget to read this important article for PAMM trader
1. How to become a PAMM Trader
2. Understanding your Forex Trader Level as PAMM Trader