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ZigZag MT4 Indicator – Free MT4 Indicator 

 June 17, 2016

By  Advanced Strategies

The ZigZag Strategy utilizes the ZigZag MT4 Indicator (obviously!) to spot momentum changes in the Forex pair. This is a momentum indicator and can be used to detect when the momentum of a currency pair is rising or waning, and thus serves as a basis for determining possible reversal points. . The key to the use of the ZigZag indicator is to determine when the market is ripe for reversal. And you know well enough that if you can spot key reversal points, then world is your oyster. That is why another indicator capable of spotting oversold and overbought areas in the market is used in conjunction with the zigzag indicator.

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ZigZag MT4 Indicator Strategy and Trading Rules

The main focus of this strategy is to look for areas where the Zigzag Mt4 Indicator reversal corresponds to the overbought or oversold signals displayed on the Stochastics oscillator. The downward reversal is expected where the market is overbought, and an upside reversal is expected when the market is oversold.

Once the overbought and oversold areas are detected on the chart, the trader is then expected to make the entry based on the bounce of the candle on the zigzag line. This is demonstrated below.

ZigZag MT4 Indicator Long Entry Rules

A long entry is initiated when the following setup occurs:

  • The Stochastics indicator lines cross at a level of <30, which is the oversold region.
  • The price action candles are located above the zigzag line, but come down to make contact with the line at the point of crossing of the Stochastics lines.
  • The market entry is made at the open of the next candle.
ZigZag MT4 Indicator Strategy and Trading Rules
ZigZag MT4 Indicator Long Entry Rules

Stop Loss and Take Profit for Long Entry

The stop loss for this trade is set at a few pips (about 20-30 pips) below the low price of the entry candle. It is better to allow the zig zag reversal to take place before setting a stop loss.

For the Take Profit settings, there are certain pointers as to where the trader should take profit. The best way to take profits from the trade is to allow the Stochastics indicator to head over to the overbought zone. This signals the end of upward momentum and imminent downward reversal, and therefore is a good spot to exit the trade.

ZigZag MT4 Indicator Short Entry Rules

The rules for a short entry are as follows:

  • The Stochastic indicator lines cross at a level of >70, which is the overbought region.
  • The price action candles are located below the zigzag line, but move up to make contact with the line at the point of crossing of the Stochastics lines.
  • The market entry is made at the open of the next candle.
ZigZag MT4 Indicator - Short Entry Trading Rule
ZigZag MT4 Indicator – Short Entry Trading Rule

Stop Loss and Take Profit Settings

The stop loss is set at a few pips (about 20-30 pips) above the high price of the entry candle.

For the Take Profit settings, the trader should note the following:

  • The TP is dynamic and so cannot be set when the trade is initiated.
  • The best possible guide to use when trying to take profit is to allow the market to head to oversold areas. This is a sign of possible upward reversal and waning downside momentum. When the Stochactic lines cross at the oversold area, exit the trade.

Precaution when Trading with the ZigZag MT4 Indicator

Of course, you must know that not all the trend lines traced by the Zigzag MT4 Indicator point out accurate reversal signals. The only valid signals are those which obey the following rules:

  1. Those signals which are traded strictly using the Stochastic lines cross at the price extremes, i.e. at the overbought and oversold regions of the market. Any cross of the Stochastic indicator which does not occur at the oversold or overbought areas must be ignored, no matter how good the opportunity looks.
  2. The candle must be allowed to make contact with the zigzag line when the Stochastics lines have crossed to provide valid trading signals.
  3. Traders should also pay attention to the candlestick pattern formations at the point of entry and point of exit. These can be pointers to the validity of trading signals.

ZigZag MT4 Indicator – Recommended Time Frames

Technically speaking, you can use this MT4 indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We recommend that you use higher time frames like the 4H for better consistency.


How to trade with ZigZag Strategy Video Tutorial


How to trade with ZigZag Strategy Video Tutorial


ZigZag MT4 System Indicator Download

We have provided this powerful trend trading indicator to you at no cost. We humbly request for your help to spread the word by sharing on one of the social platforms below. To unlock the download link, you just need to share this page to help us achieve our goal of helping more traders out there.

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Leave us a comment below to let us know your thoughts on this indicator. If you like this indicator, you might like see other indicators that we have carefully selected that will help you in your trading journey.

And if you can, you really should invest in a proven MT4 Expert Advisor to help you generate some profit on full autopilot. We highly recommend this powerful MT4 Expert Advisor.

Visit our Free MT4 Indicator Download page. We hope you have enjoyed this post as much as we have creating it. Good luck and thank you for your readership.


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