The document presents the ZigZag trading strategy for making money in forex markets. It involves using the ZigZag indicator to identify significant swing highs and lows, then drawing Fibonacci extension lines between the first two waves to anticipate where the third wave may form. Traders are instructed to buy at the close of a three-bar pattern where the right bar breaks above the left, place a stop loss below this pattern, and take profit at 2-3 times the stop loss amount. Additional training is offered on a fractal trading strategy.
1. Z I G Z A G
T R A D I N G
S T R A T E G Y
P R E S E N T E D B Y
T H E F O R E X S E C R E T
2. ZigZag Trading Strategy, How to Make
Money in Forex Fast
There is an easy way to make money in Forex with our ZigZag trading
strategy.
The zigzag pattern will give you a more unobstructed view of the market price
swings on different time frames.
You can swing trade, day trade, and even to do scalping with the zigzag
pattern.
We also have training on the fractal trading strategy, if you are interested.
3. What is the Zigzag Indicator?
The Zig Zag is a technical indicator that measures the swing highs and swing
lows of a market.
This will help you identify with better accuracy the market swing high and low
points.
The Zigzag tool is primarily used to filter out the market noise.
4. Step #1: Set the ZigZag indicator settings
at 20 for the Depth and 5% Deviation
First, we want to make sure the ZigZag tool will only show the more significant
swing high and swing low points in the market.
For this, we have to use at least 20 periods for the Depth and 5% deviation to
accurately display the market swings.
5. Step #2: Plot the Fibonacci Extension line once
the first two swing waves are established
In order to plot the Fibonacci Extension line, we need three points of
reference.
As soon as the first two waves of the Zig Zag pattern are developed, we’re
offered three swing levels. We’re going to use them to draw the Fibonacci
extension levels.
The reason why we use the Fib extension levels is to try to anticipate where
the last swing wave of the Zig Zag pattern will form.
6. Step #3: Wait for the third wave to terminate
between 0.618 – 0.786 or between 1.0 – 1.272
The reality is that market symmetry doesn’t happen
often.
The AB=CD pattern requires a lot of precision in
order to have all the conditions for this pattern to be
valid.
Throughout our back testing software, we have
found out that the third wave of the zigzag pattern
ends between 0.618 – 0.786 or 1.0 – 1.272.
7. Step #4: Wait until you have a candle with a higher
low on the right and the left. The bar from the right
needs to break above the bar on the left.
The three bar pattern to spot a market swing point is
quite easy.
All you need to do is to wait until you have a candle
that has a higher low on both the left and the right
side of it.
In order for this three bar pattern to be confirmed we
also need the bar from the right to break above the
high of the bar from the left.
8. Step #5: Zigzag Trading Strategy: Buy at the close of
the three bar pattern
After the three bar pattern is completed, we don’t want to lose any more time, and we go
buy at the market.
9. Step #6: Hide your protective Stop Loss below the
three bar pattern
The stop loss is going to go below the three bar pattern. Your stop loss may be a little bit
bigger depending on the time frame you’re trading.
You want to make sure that the three bar pattern where your stop loss goes maintains at
least a 2% risk.
You don’t want to risk more than 2% of your account in any given trade.
10. Step #7: Take profit equal 2 or 3 times more the Stop
Loss.
The classical ABCD pattern essentially keeps you at a 1:1 risk reward ratio.
Also, a lot of the times with the ABCD pattern, you’ll see it pretty frequently that those
targets areas are front runned.
However, when you trade with the Zig Zag indicator, you’re able to capture two or even
three times more the risk taken.
