----- 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 );