Trade simulators vs Zig zag indicators: which is best?

By Henry Cooper

May 2, 2023

Level: Experienced

Reading time: 4 min

Listen

2:44

How do you identify significant trading opportunities in the global market? Many trading experts have a go-to wildcard that helps them erase a second guess when trading. Some prefer to test their strategies using trade simulators, while others are technically inclined to trading indicators.

Whatever the case is for you, we are here to clear your mind about what approach you should confidently face the global market with. Before proceeding, you must understand that the trade simulator and Zigzag indicator are distinct methods to identify trading opportunities. It is not in your best interest to discredit one for the other, as you will need all the help you can get from your trading journey.

Start from $10, earn to $1000

Trade now

The Zigzag indicator

The zigzag trading indicator is considered to bring order to trading chaos. It is an indicator that can be given specific instructions to execute by drawing a Zigzag line across the area of execution. For example, you can assign education to the zigzag indicator to draw a line whenever there is a 5% decline or advance in the price of an underlying asset.

For the above illustration, the price Zigzag indicator will look like this:

*The Zigzag indicator executing a 5% decline or advance in price*

McGinley Dynamic Indicator

In this case, a Zigzag line will be visible on the price chart when there is a 5% decline or advance in price. The above is just a sketch. Here is what it looks like on an actual chart below with the same 5% Zigzag indicator setting:

There are a few things to note when using the Zigzag indicator

The trader can change the values of the indicator at any time
The Zigzag indicator uses points instead of percentages

Trading simulator

First-year traders are encouraged to use trading simulators to test their trading capabilities until they are confident enough to go live. The essence of trading simulators is to help you build trading experience as you master your craft. However, the results on a trading simulator are different from that of a real-life trade. A trading simulator is a go-to option for novices who need help comprehending the basics of trading indicators and would like to flex their muscles on new trading strategies.

*The main objective of a trading simulator is to test trading strategies*

When it comes to trading simulators, there are three main types, and the goal of each is to mimic a real trading environment:

Paper trading
Real-time simulators
Replay simulators

Pros of zig-zag indicator

The zigzag indicators help you to time your exits well
With the zigzag indicator, you can better analyze your chart.
The Zigzag indicator is an essential tool for mastering technical trading.
You can define market structure easily with the Zigzag indicator
It takes little time to implement.

Cryptocurrencies: what to expect in 2023

2023 is expected to be the year of recovery for the crypto market. Read on to see what to expect in 2023 for cryptocurrencies.

Cons of zig-zag indicator

You can only trade progressively declining or advancing market
It does not assure effectiveness during sudden price movement

Pros of trading simulators

It helps you to identify what strategy works
You do not have to risk anything
You can master how to trade a broad range of assets within a short period

Cons of trading simulators

The trader is likely to be impatient
You may get used to trading with unrealistic lot sizes
Does not include trading psychology

Final verdict

As a global trader, you must identify what works best for you and how to utilize it for your profit. The Zigzag indicator is ideal for traders who want to go beyond the face value of trading. On the other hand, trading simulators are best for traders who would like to assess their trading strategies before launching out. Also, veteran traders recovering from a loss can utilize both methods to avoid future losses.