# Zig Zag / Elliott Wave (ZZ)

The Zig Zag Indicator acknowledges minimum price changes and ignores those that do not fit the criteria.

###### Calculation

A Zig Zag set at 10% with OHLC 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. The value at the 10% is called the target of Zig Zag. If a commodity traded from a low of 100 to a high of 109, the Zig Zag 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 Zig Zag would draw a line from 100 to 110 because the target was reached. If the commodity continued on to a high of 112, this line would be extended to 112 (100 to 112). The Zig Zag would not reverse until the commodity declined 10% or more from its high. From a high of 112, a commodity would have to decline 11.2 points (or to a low of 100.8 the new target) for the Zig Zag to reverse and display another line.

Retracements are from zig zag high to high, or zig zag low to low. If Zig Zag retraces to a zig zag High, they are calculated from the movement from the previous zig zag low to the current high divided by the movement from the previous zig zag high to the previous low.

The Zig Zag indicator arrows are thrown when the market hits the target value. That means that a buy signal occurs when a valley is found by the market rising above the target value. That also means that a sell signal occurs when a peak is found when the market falls below the target value. In the example given that means the buy signal happened at 110 and the sell signal would happen at 100.8 if the market declined.

Zig Zag Example:

###### Preferences

Once the Zig Zag is turned on right-click and go to 'Chart Overlay Preferences' and select Zig Zag. The Zig Zag preferences will appear in the Control Panel. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

Change Sensitivity: Change the percent of calculation.

Autoscale: Select to autoscale Zig Zag for the chart you are viewing. Autoscale is activated automatically when first turning on the Zig Zag overlay in your chart.

Line: Choose the color, line style, and line thickness of your indicator line.

Line, Alt: Choose the color, line style, and line thickness of the retracement lines.

Show Retracement Target / Show as Percent, / Show Retracements / Show Alternative Retracements: to show percents, retracements, and alternative retracements.

Number of Alternative Lines: Enter the amount of alternative retracement lines you want to show on the chart.

Font: Select the font, size, and color of the text. You can also choose to bold or italicize.

Buy/Sell Arrows: Turns the display for buy/sell arrows on and off. You also have the option to change the color of the buy/sell arrows.