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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: hobo who wrote (9601)	2/14/2001 2:51:40 PM
From: hobo	Read Replies (1) \| Respond to of 10876

Actually... in these markets, i think this Zig Zag filter may merit a closer study.... The ZigZag feature on SharpCharts is not an indicator per se, but rather a means to filter out random noise and compare relative price movements. The ZigZag can be set to acknowledge minimum price changes and ignore those that do not fit the criteria. The minimum price movements are set in percentage terms and can be based on either the close or high/low range. A ZigZag set at 10% with OHCL bars would yield a line that only reverses after a change from high to low of 10% or greater. All movements less than 10% would be ignored. If a stock traded from a low of 100 to a high of 109, the ZigZag would not draw a line because the move was less than 10%. If the stock advanced from a low of 100 to a high of 110, then the ZigZag would draw a line from 100 to 110. If the stock continued on to a high of 112, this line would be extended to 112 (100 to 112). The ZigZag would not reverse until the stock declined 10% or more from its high. From a high of 112, a stock would have to decline 11.2 points (or to a low of 100.8) for the ZigZag to reverse and display another line. Uses of ZigZag Filter: Volatility and daily price fluctuations can produce erratic movements or noise. The ZigZag can be used to filter this noise. If price movements smaller than 5% are deemed insignificant, then the ZigZag can be set at 5% and all movements less than 5% will be ignored. Elliott Wave: The ZigZag can be used to identify waves for Elliott Wave counts. (Note: The object of this article is not Elliott Wave Theory, but simply to illustrate methods of using the ZigZag.) more.... (with chart examples) stockcharts.com