In the field of calligraphy, the 20 "Zhi" in Wang Xizhi's classic "Lanting Collection Preface" have their own shapes and are completely natural, so they have the reputation of "the best running script in the world". In the spot silver trend chart, there will be many technical graphics similar to "zigzag" or "Z". If investors know how to superimpose the Zigzag indicator on the main chart, they may be able to find them more clearly.
The ZigZag indicator in the spot silver daily K-line chart
ZigZag indicator overview
In spot silver trading, the ZigZag indicator can be used as a filter for market direction changes. Technical analysts and traders often use this indicator to remove "noise" from price charts. The ZigZag indicator can reflect the most important trend in the market in a concentrated manner and eliminate the secondary shock market. Although the purpose of this indicator may not be as good as other technical indicators, and it cannot be used as an independent trading system, it can highlight important technical forms in the market, and can also confirm the potential trend conversion market.
Settings of the ZigZag indicator
In the current mainstream precious metals trading platform, investors can set the volatility turning rate parameters of the ZigZag indicator by themselves. The principle of setting depends on the specific changes in the silver price market: the higher the parameter setting, the lower the sensitivity of the indicator ; On the contrary, if the value is set too low, the filter function of the indicator will be greatly weakened; too strict setting will make investors miss the profitable silver price trend data. Therefore, most software will set the default value of the parameter between 8% and 15%.
How to combine the ZigZag indicator to develop a trading strategy
As a "temporary" indicator, ZigZag should not be used as a key strategy when trading. In general, users combine it with Fibonacci levels and Elliott Wave Theory. Short-term traders like to use the Zigzag indicator because it can analyze the retracement of the market. But no matter how you apply the Zigzag indicator to your own trading system, you must not forget that the market signal it provides is lagging. Spot silver trading is changing rapidly. When investors use the ZigZag indicator, it is best to combine indicators that can send out leading signals as a necessary supplementary means.