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
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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 );
