Let's dive into the 'Three Indians' pattern, a fascinating indicator based on the ZigZag tool.
About the System:
While I won't go into a detailed description of the system here—it's quite easy to find online—I do want to highlight the importance of market context. The term 'Three Indians' is a direct translation from Russian; if you know a different name in English, feel free to drop it in the comments! Just a quick reminder: this pattern should always be viewed in relation to the current market situation. It’s not a standalone trading signal.
Two Main Trading Approaches:
- Trend Trading: This is the safer approach, where the pattern serves as a signal for the continuation of an established trend after a correction. Check out the chart below for a visual representation:
- Counter-Trend Trading: This method is riskier and suggests a significant trend reversal. In this case, the waves of the pattern should be noticeably larger compared to the trend or its last wave:
Options:
The beginnings and middles of the lines align with the first and second prospective 'Indians' respectively.
Here are some settings you might find useful:
extern int ExtDepth=10;// ZigZag optionsextern int ExtDeviation=5;extern int ExtBackstep=3;extern double K_MinWave=0.6;// Minimum size of a wave from the 1st Indian relative to the 2nd, to filter out small wavesextern int Depth=3;// Depth of search for the 1st Indian, accounting for the filter, but no more than 10!
And don’t forget to customize your line history, colors, and thickness!
Final Thoughts:
Understanding the 'Three Indians' pattern can enhance your trading strategy, whether you’re riding the trend or looking to catch reversals. Remember, always keep an eye on market conditions!
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