A Daily Swing Trade

The Zig Zag indicator shows past performance trends and only the most significant changes. It does this by filtering out any changes less than a specified amount.

The Zig Zag indicator is used primarily to help you see changes by highlighting the most significant reversals. Understand that the last segment in a Zig Zag chart can change based on changes in the underlying plot, price being only one example. That is, a change in a security's price can change a previous value of the indicator. Since the Zig Zag indicator adjusts its values based on subsequent changes, it has perfect hindsight into what prices have done. Do not try to create a trading system based on the Zig Zag indicator, as it to be used to illustrate historical patterns.

The Zig Zag indicator is calculated by placing imaginary points on a chart when prices reverse by at least the specified amount. Straight lines are then drawn to connect these imaginary points. Any changes in prices that are less than the specified amount are ignored.

PThe Displaced Moving Average takes the current moving average and shifts it forward (or backward) in time. Use to de-trend the data, for cycle estimation, for phasing or as a simple moving average trading system.

While the first number in the study specifies the period of a simple moving average (e.g., 28 days), the second parameter specifies the shift period (e.g., 5 days); enter a negative number to shift the moving average back (e.g., -14 days). When the moving average is shifted back, the remaining portion of the study is computed with the moving average based on the available data for each day (e.g., 13 days, 12 days, etc.)

The mathematics of a moving average will always force it to follow or lag the actual price data. By centering the moving average, you will have a more accurate picture of the moving average relative to the current price on the chart. A Displaced Moving Average study could be quite useful in locating and estimating cycles...