What is the Autoscaling Zigzag Indicator?
The Autoscaling Zigzag is a handy tool that helps traders identify new swing points based on a customizable step size. The beauty of this indicator lies in its sensitivity, which you can easily tweak using a single input called "scale." This adjustment controls how responsive the indicator is to price changes, allowing you to fine-tune it to fit your trading style.
Understanding Step Size
The step size is crucial as it sets the minimum price movement needed to change the current wave direction. Think of it as the threshold that must be crossed before we consider a swing direction to have flipped. Unlike the traditional Zigzag indicator, which relies on a "depth" parameter to define how many price bars are necessary for a swing reversal, this one zeroes in on price movement itself. However, the end goal remains the same: to provide you with a clear picture of market swings.
How to Use the Autoscaling Zigzag
Even though it’s a different approach, the Autoscaling Zigzag behaves similarly to its traditional counterpart. It continues a leg until a new swing is confirmed, making it an excellent tool for swing analysis.
Getting Started with the Scale Input
The default scale input of 1.0 is tailored for currency pairs. If you’re trading XAUUSD, consider starting with a scale input of 3000 and adjust from there. For BTCUSD, you might want to kick off with a scale input of 25000. For other markets, a little trial and error will help you pinpoint an appropriate starting scale value.
Where to Find the Original Indicator
This Autoscaling Zigzag is a refined version of an MT4 indicator developed by Evgeniy Chumakov. If you’re interested in checking out the original MT4 version, you can find it here.
As you increase the scale value, you’ll notice that the Zigzag becomes more sensitive to price changes, leading to more zigzag points appearing on your chart. This feature can be particularly beneficial for traders looking to capture every swing in volatile markets.
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