----- Original Message -----
Sent: Thursday, October 30, 2008 10:25
PM
Subject: [amibroker] The Theory of Zig
and How to make it Work
A friend asked me why he
can not trade with the Zig indicator.
I answered: "Because it
looks into the future."
He said, "What does that
really mean?"
I said: "It looks into
the future."
He said,
"Huh".
Can someone explain,
without using the words "It looks into the future", why the Zig indicator can
not work.
How is it coded
internally? What makes it work--plot that is?"
I found some code on my
hard drive from 2004 called "Zig Zag Safe to Use". I will copy the code
below.
Why does this code say
that it is "Safe to Use"?
What do you look at, what
does the several adjustment values do, that makes it safe?
Any explanations in
english, that are easy to understand?
Will this code be safe to
trade?
Thanks,
Ken
============================================================
array =
Close;
amount
= Param("Amount", 5, 1, 50, 0.5 );
adjust =
Param("adjust",0.001,0.001,0.10,0.001);
zz0
= Zig( array,
amount );
zz1
= Ref(
zz0, -1
);
zz2
= Ref(
zz0, -2
);
tr
= ValueWhen(zz0 > zz1 AND zz1 <
zz2, zz1);
pk
= ValueWhen(zz0 < zz1 AND zz1 >
zz2, zz1);
PU
= tr + 0.01 * abs(tr)*amount;
PD
= pk - 0.01 * abs(pk)*amount;
ZZT = IIf( array
>= PU AND zz0 > zz1, 1,
IIf( array <= PD AND zz0 < zz1, -1,
0 )
);
ZZT = ValueWhen( ZZT != 0, ZZT
);
// plot price bar
chart
Plot( Close, "Price",
1, styleLine
);
// plot Zigzag and zigzag
trend
Plot( ZZT,
"ZigZagTrend", colorRed, styleOwnScale );
Plot( zz0, "ZigZag
line", colorBlue, styleThick
);
// Plot the
ribbon
ribboncol=
IIf( ZZT
> 0, colorGreen,
colorRed );
Plot( 2, "ZZT Ribbon",
ribboncol, styleArea | styleOwnScale | styleNoLabel, 0, 100 );
GraphXSpace =
10;
Buy = Cover = Cross(
ZZT, 0
);
Sell = Short = Cross(
0, ZZT
);
// plot
arrows
PlotShapes( Buy
+ 2 * Sell, ribboncol, 0, IIf( Buy, L, H ), -30 );