The ZigZag forex trading strategy is a scalper’s delight, as it offers a whole new dimension towards making profits on price moves. A fine bled of the ZigZag.ex4 and Zigzagarrows.ex4 trading indicators is all that is required to kick start this awesome strategy.
MetaTrader4 Indicators: ZigZag .ex4(default setting), Zigzagarrows.ex4 (default setting)
Preferred Time Frame(s): 1-Minute, 5-Minutes
Recommended Trading Sessions: Any
Currency Pairs: any pair except exotics
Trading Example (Click the picture for full size view)
Long Entry Rules
Place a buy entry when the following conditions or rules are in place:
- If the blue upward facing arrow forms below price bars, it denotes a bullish signal. For the signal to be valid, the blue upward pointing arrow must be connected to another prior oppositely pointed red arrow via the Zigzagarrows.ex4 custom indicator.
On Fig. 1.0, buy alerts by blue upwards pointing arrows that formed on the chart were ignored, since they were not linked by the zigzag custom indicator.
- If the red line of the zigzag custom indicator that connects opposite pointing arrows sees a bullish candle close above its line, a buy is advised.
Stop Loss for Long Entry: Place stop loss ~ 5 – 15 pips below entry price.
Exit Strategy/Take Profit for Long Entry
Exit or take profit on position(s) if the following rules are observed:
- If the down pointing red arrow of the Zigzagarrows.ex4 custom indicator that is linked via the line of the zigzag custom indicator forms above price bars, it is an indication to exit or take profit.
- If price closes below the line of the zigzag custom indicator prior to “Rule 1” above, an exit or take profit is most suited.
Sell Entry Rules
Initiate a sell position if the following chart or indicator patter(s) are on display:
- If the red downward facing arrow of the zigzagarrows.ex4 custom indicator forms above price bars, it signals a bearish trend. For the trend to be valid, the red downward pointing arrow must be connected to another preceding oppositely pointed blue arrow via the red line of the Zigzag custom indicator.
- Following “rule 1” if along the developing line of the ZigZag.ex4 custom indicator, price pushes below it, then we can say that price is being pressured lower, hence a bearish trend.
Stop Loss for Sell Entry: Place stop loss ~ 5 – 15 pips above entry price.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit on position(s) if the following conditions are place:
- If the upward pointing blue arrow of the Zigzagarrows.ex4 custom indicator that is linked via the line of the zigzag custom indicator to the preceding signal forming arrow (red arrow) forms below price bars, it is an indication to exit or take profit.
- If price closes above the line of the zigzag custom indicator after fulfilling “Rule 1” above, an exit or take profit is most suited.
About The Trading Indicators
The ZigZag.ex4 custom indicator is designed to track and link extreme points on the activity chart, offering traders one of the easiest ways to plot trend lines.
The ZigZagarrows.ex4 custom indicator is very similar to the ZigZag indicator, howbeit the former replaces the plotted line with arrows, thereby offering a better visual representation of its signals.