The Zig Zag indicator is used by traders in the financial markets to identify and track changes in price trends. It works by reducing the noise in price data, allowing the trader to focus on more important patterns and trends in the market.

The Zig Zag indicator works by eliminating small price fluctuations and emphasizing extreme highs and lows. By filtering out the noise, the indicators allows traders to better identify peaks and troughs in price action which are likely to signal market reversals. This helps traders identify more reliable and longer duration trends in the market, allowing them to better assess whether a trading opportunity exists in a particular market.

The strength of the Zig Zag indicator lies in its simplicity. Unlike other trend-following indicators, there are no parameters to configure and no calculations to perform. It simply shows the price highs, lows and intermediate points, making it easy to see where the market changes direction or to identify support and resistance levels.

The Zig Zag indicator works best in a strongly trending market. It can be used to complement other indicators and to anticipate changes in market direction. The indicator can be used on all time frames, but is particularly useful on longer time frames such as the daily or weekly chart.

In conclusion, the Zig Zag indicator is a powerful and simple tool for identifying changes in market direction. While the indicator works best in strongly trending markets, it can be used in all market conditions to identify potential opportunities. By clearly displaying highs, lows and changes in direction, the Zig Zag indicator can be a useful complement to other indicators in the traders toolkit.