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Zig zag indicator in met stock. It had a bug and which metastock if want to
remove can be an excellent tool.
Now first understand how I works. I am sure many know it already.
Say the low is 100. Zig Zag filter is 5% on closing.
If the close is above 105 after the low of 100 then zig zag up swing
confirms.
If the close is in between 100 and 105 then it drag the line up which it
should not do. (that is the bug) and can be removed by metastock software
programmer. No idea why they are not doing it for so many year when many
people have already highlighted.
The line should not get dragged up till 105 is not crossed on closing.
Before that if price move below 100 then the calculation will start from the
low made.
The problem of identifying peak and trough is that when the price is between
100 and 105. The line gets dragged up. Say 103. In that case it takes the
recent peak 1 as 103 which is likely to change and hence the problem.
In some case the breakout identification has worked well and in some case
creates problem but of the line which gets dragged before the confirmation
of reversal
I had made expert advisor with zig zag indicator and it worked great on many
occasion . but when it fails it fails miserably as the bottom and top
change.
I could get identification of higher bottom and higher tops. Breakouts. With
targets and stop loss with fibo relation. The stop los of higher bottom on
few occasions changes which creates trouble.
I was also able to get running stop loss of higher bottoms as the bottom
moves higher.
At some point mismatch come due to the reversal formula of zig zag indicator
which should not be dynamic once the reversal is confirmed and which should
get dynamic only when reversal gets confirm above the filter percentage or
point.
Other software which we are using has the same capabilities which has
modified the zig zag indicator
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