MT4 indicator shows three zigzags with varying periods through colored dots instead of lines. Trade signals appear at dot 3 and should be used with a trend following indicator. The Three Level ZZ Semaphore Expert Advisor for MT4 is a simple EA that uses semaphore for trade entry and exit. It is not yet suitable for live trading due to issues with lot size.

Exchange trading strategy

Introduction

The three-level ZZ semaphore indicator mt4 is a popular technical analysis tool used by Forex traders to identify the market trends and price reversals. In this article, we will discuss how this indicator works and how traders can use it to their advantage.

What is the three-level ZZ semaphore indicator mt4?

The three-level ZZ semaphore indicator mt4 is a custom indicator based on the Zigzag indicator. Unlike the Zigzag indicator that plots lines, the three-level ZZ semaphore indicator mt4 plots dots on a chart. These dots represent the swing points in the market, i.e., the high and low points of each zigzag.

The three levels mentioned in the name of the indicator represent the three periods for each zigzag. These periods are short-term, medium-term, and long-term. The dots vary in size and color, and they are numbered one to three, with number three being the most important.

How does the three-level ZZ semaphore indicator mt4 work?

The three-level ZZ semaphore indicator mt4 works by identifying the swing points in the market and assigning them different levels based on the period of the zigzag. These swing points represent the turning points of the market trend and are used to generate buy and sell signals.

The indicator generates a buy signal when it paints a dot 3 below the candlestick, indicating an upward trend. Conversely, it generates a sell signal when it paints a dot 3 above the candlestick, indicating a downward trend.

The other two dots, marked as 1 and 2, represent short-term market momentum and should be used only in conjunction with the dot 3.

How can Forex traders use the three-level ZZ semaphore indicator mt4?

Forex traders can use the three-level ZZ semaphore indicator mt4 as a standalone indicator or in combination with other technical analysis tools. Traders should enter a trade only when the dot 3 appears, and the underlying trend is in the same direction as the trade.

To maximize the effectiveness of the indicator, traders should use it together with a trend-following indicator such as an exponential moving average with periods set at 75 or 100. This will help confirm the trend direction and reduce false signals.

Traders can also experiment with the indicator’s settings to suit their trading style and timeframe. The default periods for the three zigzags are 5, 13, and 34, but traders can change them from the indicator’s input tab.

When using the three-level ZZ semaphore indicator mt4 for trade entry, traders should also consider the one-day high and five-day high for sell trades and the one-day low and five-day low for buy trades. These levels can serve as confirmation for the trend direction and increase the probability of successful trades.

Conclusion

The three-level ZZ semaphore indicator mt4 is a useful tool for Forex traders to identify market trends and reversals. Its unique feature of plotting dots instead of lines makes it less cluttered and easier to interpret.

To maximize its effectiveness, traders should use it in conjunction with other technical analysis tools and confirm the trend direction before entering a trade. With proper use and experimentation with its settings, the indicator can significantly improve the success rate of Forex trades.