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Guy,
<p>I use Zig Zag as an aid in identifying peaks and troughs for drawing
trendlines. It's not perfect, but for the purposes of backtesting, it adds
a bit of consistency in establishing a minimum peak/trough size.
Of course some judgment calls are also necessary. I also have been
using it along with my Zig Zag peak and trough "confirming" indicator for
the last year or so without problems to enter in some real time EOD trades.
Actually, I did screw up once. I forgot to use the confirming indicator
or do the math to verify that a trough was really locked in and went ahead
and entered when I got a signal. The next day after the close when
I downloaded data, the trough was gone. <g> I made the brilliant
decision to stay with the trade anyway. Wrong answer. Got stopped
out a couple days later. I think hope entered into the equation at
some point, a sure sign of failure. :) Now I triple check things.
<br>So the only thing I use the dynamic leg for is to tell me when price
has moved enough for a potential peak or trough to be a real, honest-to-goodness
peak or trough. Then I can draw a trendline with confidence that
nothing will disappear on me. I don't (and can't) always rely on
ZZ for peak/trough identification or for trendline placement, but, it does
take some of the subjectivity out of the process. I don't really
know what else it can be used for other than to identify peak/trough/turning
points. And like you, the first time I plotted Zig Zag on a chart
I thought I had found a money tree. :-) Then I read up on it
and my heart rate returned to normal. I guess there's something to
be said for reading directions first, huh? <g>
<p>Regards,
<br>Ken
<br>
<p>Guy Tann wrote:
<blockquote TYPE=CITE><span class=860460822-14011999><font face="Arial"><font color="#0000FF"><font size=-1>Ken</span><span class=860460822-14011999></span><span class=860460822-14011999>That
last leg is dynamic. The problem, as you state, is determining when
it quits being dynamic. That happens after a change in direction,
therefore you will always be a day late and a dollar short :). If
I remember correctly, somewhere in the MetaStock manual is a disclaimer
about using the Zig Zag indicator. Found that after I wasted a ton
of time working with it. :)</span><span class=860460822-14011999></span><span class=860460822-14011999>Guy</font></font></font></span><span class=860460822-14011999></span>
<blockquote
style="BORDER-LEFT: #0000ff solid 2px; MARGIN-LEFT: 5px; PADDING-LEFT: 5px">
<div class=OutlookMessageHeader><font face="Times New Roman"><font size=-1>-----Original
Message-----</font></font>
<br><font face="Times New Roman"><font size=-1><b>From:</b> owner-metastock@xxxxxxxxxxxxx
[mailto:owner-metastock@xxxxxxxxxxxxx]<b>On Behalf Of</b> divenfish@xxxxxxxxxxxxx</font></font>
<br><font face="Times New Roman"><font size=-1><b>Sent:</b> Thursday, January
14, 1999 9:47 AM</font></font>
<br><font face="Times New Roman"><font size=-1><b>To:</b> metastock@xxxxxxxxxxxxx</font></font>
<br><font face="Times New Roman"><font size=-1><b>Subject:</b> Re: Zero
Balance</font></font></div>
<p><br>I believe the last leg is always dynamic.
<br>Don't hold me to any of the following, but if I remember correctly,
the last peak or trough is dynamic until price exceeds or equals the user
specified Zig Zag points or percentage. In the case of a potential
Zig Zag trough "\/" of say 1 point [Zig(LOW,1,$)], a subsequent bar's
low would have to exceed or equal the low of the trough in question by
the minimum user defined value, in this case 1 point. Once this has
occurred, that trough becomes static, or locked in. So if the
low of the potential trough is 50, the trough would be established once
a subsequent bar's low equals or exceeds 51.
<p>If using a 1 point Zig Zag of the close [Zig(CLOSE,1,$)], the trough
in question would become static once a subsequent bar's close has exceeded,
by 1 point, the lowest close of the trough in question.
<br>But...I'd advise you to check it out for yourself because I wouldn't
want to lead you astray. :)
<br>You can create an indicator or two to define at what value this will
happen or when it has happened. Or an expert to color the bars.
<p>The following uses 1 point and Low as the input, and should plot a 1
when the 1 point
<br>Zig Zag trough [Zig(L,1,$)] in question is is no longer dynamic:
<br>L>=Trough(1,Zig(L,1,$),.001) + 1 {This uses less code and
seems to work similar
<br>
to what I had been using, but I have not thoroughly
<br>
checked it out.}
<p>The following, which uses 1 percent, not 1 point, should plot a 1 when
the 1% trough
<br>[Trough(1 ,L ,1 )] in question is is no longer dynamic:
<br>L >= Trough(1 ,L ,1 ) * 1.01
<p>The same logic could be applied to the Zig Zag of the close.
<br>Please let me know if what I've said is wrong.
<p>Ken
<br>--</blockquote>
</blockquote>
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</x-html>From ???@??? Thu Jan 14 21:24:05 1999
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Message-ID: <005701be403e$36621460$4755fcd0@xxxxxxxx>
From: "Jim Greening" <JimGinVA@xxxxxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Subject: Re: email Chart List
Date: Thu, 14 Jan 1999 18:27:15 -0800
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You're on it.
JimG
-----Original Message-----
From: Maciej Barszczak <Cyprys@xxxxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Tuesday, January 12, 1999 2:51 PM
Subject: Re: email Chart List
>
>
>Humphrey D Geiseb wrote:
>
>> Jim, please include me in your list.
>>
>> _________________________________________________________
>> DO YOU YAHOO!?
>> Get your free @yahoo.com address at http://mail.yahoo.com
>
>ME TOO
>
>
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