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Forex trading strategy #44 (ZigZag and Fibonacci)

Indicators used: Fibonacci Retracement, ZigZag.

How does it work?

The signaling candle i.e the candle with the zigzag must close to open another one by its side.

For a short, drag the fibo from the low to the high of the signaling candle. Enter the trade at 100.0 of the fibo and exit at 161.8 no matter how small the pips may be.
Do not trade above this limit as there may be a reversal along the line.

Stop loss should be 5 pips above the signaling candle.

Take a look at the chat it speaks for itself. If you have any comment you can post it, I will make time to check on it.



In this Chart example, is it a Buy signal or a Sell signal. It appears in the Chart that it is a Buy. In your explanation above you mention a Short.

Not sure where your stop loss is, please clarify this for me

you probably dont have any live experience with zigzag, otherwise you would know, that zigzag can change its position even a couple of candles later (very pointless indicator IMO)

Well the direction of this start is right, but get rid of zig zag(except you still need visual help in seeing waves ) instead use Fibs (its voodoo math but so many use it that it has self fullfilling capacities ) plus Pivot Points, plus multi time frame psars, have a basic understanding of S/R lines and moneymanagement, lot lot of screentime and you will sooner or later be constantly profitabel.

Eh, ZigZag isn't useless. As long as you *only consider FIXED lines*, then it can do what you want it to.

For example, I'm currently coding a M15 swing strategy that uses previous ZigZag highs and lows as breakout points; I as well have found that the 161.8 level, drawn from the previous two fixed ZigZag points, is a helpful tool in gauging the profit target.

Now obviously, if we look at the ZigZag and don't realize that it repaints the current point, then it just shows our inability to use it properly. Recognize that & how it repaints, and you'll discover more uses for this indicator.

By the way -- for this strategy, I'd suggest using it on a lower time frame, and limiting it only to active hours of the trading session (i.e. when the 14ATR is over its 14EMA, Edward actually has a breakout strategy on this site that uses that indicator combo).

Just my two cents.

-Alex

Yes youre right thats what i wanted to say , its ok to use zig zag to see waves more clearly for drawing your Fibs , but actualy its not needed

well actually it is a newbie strategey , and i think it is not accurate at all and sorry for my offensive comments and good luck mate.

The thing about this strategy is you're risking 2 for every 1 gain. Unless you have a 95% success rate with this, I don't think it's worth it. Got any back testing results for a year or two?