A simple Alligator strategy for the above example would then be: Anticipate your entry point when the Alligator lines are entwined (“sleeping”) and the “CCI” indicator is signalling 13/12/ · The Williams Alligator indicator is a technical analysis tool that uses smoothed moving averages. The indicator uses a smoothed average calculated with a simple moving The alligator indicator will aid in identifying long or short signals (trends). However, it should always be paired with other technical indicators and analysis to confirm any signals. Long 19/01/ · The alligator strategy helps a trader to identify short or long signals. Any trader would like to have a first-mover advantage in the market. The alligator technique works best 20/05/ · The three lines that make the Alligator Forex indicator (jaws, teeth, and lips) do exactly that. They follow the price. If the price rises, the three lines follow. If the price ... read more
A stronger trend is anticipated when the lines move upward along the chart. As the gap between the lines widens, the stronger the trend will be. After the uptrend becomes evident, it is the choice of the trader to determine a suitable entry point within the trend. After the downtrend becomes evident, it is the choice of the trader to determine a suitable entry point within the trend.
When a trader executes a long position, he expects the price of the underlying instrument to appreciate. On the other end, as the name suggests, a short position is the opposite of a long position.
In such a case, traders expect the price of the underlying currency to depreciate. Shorting a currency means selling it with the expectation that its value will decline soon. At a later date, the trader can purchase the same currency at a lower price. The alligator strategy helps a trader to identify short or long signals. Any trader would like to have a first-mover advantage in the market. The alligator technique works best when combined with other trend indicators.
Usually, by the time the alligator indicator provides an entry signal, the price has already made a significant move. In this regard, the following example gives a more practical way of utilizing the Alligator Indicator. You may want to take a long or short position depending on your expectations for the price. If the Lips are above the Jaw and Teeth lines, you wait for a candle to close right below the Teeth and take a short position.
If the Lips are below the Jaw and Teeth lines, and a candle closes above the Teeth, you take a long position. Save my name, email, and website in this browser for the next time I comment. Home Finance Investment Wealth. Finance , Investment January 19, 0 Comments 44 Likes.
For this reason, the Alligator indicator formula is a great tool for traders. In fact, they go hand in hand. First, one needs to look for a reversal pattern. This can be a double top or bottom, a head and shoulders pattern or a triangle.
Or, it can be one of the Japanese candlestick techniques. The Japanese were masters in spotting reversals. As such, most of their techniques deal with trend reversal approaches. Use the Alligator indicator Forex platforms provide as confirmation. What is the confirmation then? The result is one of the best approaches of how to use the Alligator indicator in Forex.
Especially relevant is this system when used with a Japanese candlestick pattern technique. Moreover, a morning star is perhaps the most powerful bullish reversal pattern ever! Confirmation protects a trading account. The Alligator Forex indicator is the perfect tool for that. Probably as important as the reversal pattern is its confirmation. Without it, traders end up going long, in this case, only to find out that the market comes for their stop.
Another great Alligator Forex trading system consists of interpreting the crosses. That means, the crosses between the three lines that make the indicator. How about spotting the fake ones? A typical approach is to use the faster average the green line for spotting fake crosses. Therefore, eyes on the green and red lines, please! When the green line crosses the red one and then turns again without reaching the blue line, a fake move just forms. Hence, in a bullish trend, go long on such a cross.
Or, in a bearish trend , go short when the perfect order gets back in place. Keep things simple and logical and profits will come to you. One example of a bearish cross in the chart above shows plenty of further downside potential. The fake cross was nothing but an opportunity to use what the Alligator Forex platforms offer.
And there are more of them. A similar fake cross is possible between the bigger averages: the blue and the red lines. In fact, such a cross is more powerful. It is only normal, as the two lines consider more periods before plotting an actual value. The time frame matters here too. Not for the actual cross, but for setting the right take-profit level. When a signal as described here appears, consider the time frame before setting the take-profit level.
Do that if the signal comes from the daily chart, for example. This way, you adjust your expectations with the time frame used. It calls for two big moving averages crossing. When the fast one moves above the slow one, a golden cross forms. This is bullish. When a death cross appears, the opposite is true. Bears are in control. This Alligator indicator trading system offers a similar interpretation. The secret is to use the bigger averages in the same way.
Therefore, use the red and blue lines as the faster and slower averages. Just like in the case of a golden or death cross. A cross like this shows you the type of the market: bullish or bearish. Of course, in a bullish market, we want to buy. In a bearish market, shorting a Forex pair works best.
Furthermore, use the green line of the Alligator indicator as a confirmation. If not, think twice. The opposite is true when a death cross forms. One bearish and one bullish. Both are great signals to take with the Forex Alligator indicator.
Again, simple things work best in technical analysis. Just like a displaced moving average shifts on the right side of a chart, the Alligator indicator does that too. This is a powerful tool in the hands of Forex traders. Stop for a minute and think of how this indicator functions.
The lips, teeth and jaws appear on a chart on the right side of the actual price. However, this is obvious only if you look at the current price. The currency pair is irrelevant.
Before backtesting a strategy, take a look at the current price. That is the support level eight days from now! The same with the other two lines: five days for the teeth and three days for the lips. This is very important as traders forget this small detail. When backtesting, the entry signal is EARLIER than the respective candle. Please use the login you have previously been provided. You already have full access to the ATAS platform which supports this challenge.
Please use the login credentials you have previously been. How to add the Alligator on a chart and interpret signals. This article is about: the idea of the strategy; how to add the indicator on a chart, settings; how to interpret signals; how to trade.
Chart examples; advantages and disadvantages of the Alligator; how to combine the Alligator with cluster analysis. The idea of the strategy. For example, you can use: one moving average. If the price crosses MA line from below, it is a sign that it is time to buy; if it crosses from above, it is time to sell. two moving averages. If a fast moving average crosses a slow moving average from below, it is a sign that it is time to buy; if it crosses from above, it is time to sell.
How to add the Alligator Indicator. The Alligator Indicator consists of three lines: A green line. This is a 5-period fast moving average that is shifted by three bars to the right. A red line. This is an 8-period middle moving average that is shifted by five bars to the right. A blue line. This is a period slow moving average that is shifted by eight bars to the right. How to interpret the Alligator signals. It is very easy to interpret the Alligator signals: If the green line is above the red one and the red line is above the blue one, and all three lines move up, there is an upward trend in the market.
It means that you should look for an entry for buying and exclude selling. If the order is opposite — the green line is below the red one and the red line is below the blue one, and all three lines move down, there is a downward trend in the market.
It means that you should look for an entry for selling and exclude buying. In other cases, when lines crisscross each other or very close to each other you should not sell, wait until the market stops being flat.
He made the following analogies: When the jaw, the teeth and the lips are closed lines crisscross each other , the Alligator is tired or it is sleeping. Trading should be avoided. The longer the Alligator sleeps, the hungrier it gets. When it wakes up, it is ready to hunt for bears and bulls. Traders should keep an eye out. After the hunt, the Alligator is not interested in food anymore, so it closes the jaws and rests.
Traders exit their positions because the trend is exhausted. How to trade using the Alligator indicator. Advantages and disadvantages of the Alligator. Advantages: It is easy. It consists of three MA. You can profit from big trends. It tries to avoid trading during flat periods. Disadvantages: A lot of false signals. It does not take into account the time factor.
This is a lagging indicator. When you get a signal to enter the long position, the price has already covered a significant distance in the direction of the initial momentum.
How to combine the Alligator with cluster analysis. How to start trading. The demo version is free and you can continue using the program even after the day trial period. The Alligator indicator is included in the package, as well as Big Trades, Delta, market profiles and other indicators. There is a demo account built into the ATAS platform, so you can practice trading without risking your real capital. Their position to each other indicates whether there is: an upward trend; a downward trend; a flat in the market.
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The Alligator indicator is a great Forex trading tool that has been fascinating traders for a long time. While not a moving average , riding trends is its main quality. This article shows how to use the Alligator indicator in Forex in a profitable trading way. Although it has a funny name, the indicator shows the power of bulls or bears to reverse a trend.
For this reason, the indicator is popular among Forex traders, trend followers or contrarians. Together with Fractal, Gator or the Awesome oscillator, the Alligator Forex strategy is unique in every way. It is part of a special group of indicators. Trading platforms, MetaTrader included, offer the Bill Williams indicators separate from classical trend indicators or oscillators.
All traders face a dilemma: to use trend indicators or oscillators for their analysis? However, one can use both. Regardless of whether it is part of an individual trading system or not, the Alligator indicator shows the right side of the market. Traders use it to find a bullish or bearish market, support or resistance levels, confluence areas, etc. The indicator has a funny name: it comes from the head of an alligator. As part of it, there are three averages. A trading system based on moving averages plots multiple averages on a chart.
The same here. Any Forex Alligator strategy contains three averages, with the above names. Any average has a period that it relates to. For the Alligator, these are the 13, 8 and 5 periods for jaws, teeth, and lips, respectively. All three averages combine the power of the Alligator indicator. One can choose the average type smoothed, simple, exponential, linear weighted and the price to apply it to. When either closing or opening price, a median one or not, multiple settings exist.
What makes this indicator unique is the ability to shift the averages. In fact, with the default settings, the averages shift, leaving a bit of room from the current price until the Alligator Forex indicator. We will use the MetaTrader trading platform to show how to apply it on a chart.
However, any trading platform offers it, so the principle is the same. The result is a pop-up window like the one above giving you customized possibilities. To use it like Bill Williams intended, just leave it with the default settings. Anything is editable, though: colors, levels, etc. The three averages plotted on the chart reflect the time frame you use. If the Williams Alligator indicator is set on the daily chart, the jaws consider 13 days, teeth 8 and lips 5, respectively.
For that, the following information is crucial. When using it, think of a system that follows price. No matter where the price goes, the Alligator goes. These averages closely follow price and keep traders on the trend. Because of that, missing a trend is virtually impossible. The three elements should NOT cross. When doing that, the perfect order forms. Moreover, this signals a strong trend. The bigger the time frame, the stronger the trend.
What can go wrong? Firstly, the price moves aggressively below the green line lips. This is not scary if it is the first attempt. The more the price tries, the weaker the trend becomes. In a bullish trend, it shows bulls lose steam. Also, they might become wannabe bears. Trading with the Forex Alligator indicator gives two choices: follow the trend and spot the reversal. Secondly, look for the perfect order to break. This is a bearish sign in a bullish trend. In short, trading with the Alligator indicator is easy.
Stay long when the price is above it, and short when it is below. The perfect order is a plus. The perfect order is just one Alligator indicator strategy.
It mainly deals with spotting the right trend. And sticking to it. However, Bill Williams designed it for other purposes too. Keep in mind that it shifts the averages further in time. This shifting allows for greater flexibility. In a way, it resembles the Ichimoku Cloud. That is, on the right side of the chart, obviously! Therefore, future support and resistance levels appear at present time. With the cloud, the price is in a state of equilibrium. It finds a balance between historical and future levels.
These shift backward and forward twenty-six periods. Hence, shifting is not a new concept. Bill Williams sensed its power and used it with the Alligator indicator. A wonderful Alligator indicator trading system deals with support and resistance levels. Moreover, levels are NOT horizontal. You see, traders sometimes make a fatal mistake. They believe support and resistance can only be horizontal. How about dynamic levels? As a rule of thumb, dynamic support and resistance move along with the price.
Therefore, they offer more value. The three lines that make the Alligator Forex indicator jaws, teeth, and lips do exactly that. They follow the price. If the price rises, the three lines follow. If the price falls, they fall too.
The bigger the distance between the lines, the stronger the support and resistance area. The bigger the time frame, the more difficult for the price to break through.
In this way, the area between the first line the green one — lips and the last one the blue one — jaws is dynamic support or resistance.
For example, in a bullish trend, it shows support. Note the Alligator indicator MT4 support on it. It starts from the green line and ends with the blue line. The lips offer weak support. If bears push stronger, they might reach the teeth. Jaws represent the final support. Trading is fun if a logical approach governs it.
Decisions to buy or sell should come at support or resistance. For this reason, the Alligator indicator formula is a great tool for traders. In fact, they go hand in hand. First, one needs to look for a reversal pattern. This can be a double top or bottom, a head and shoulders pattern or a triangle. Or, it can be one of the Japanese candlestick techniques. The Japanese were masters in spotting reversals. As such, most of their techniques deal with trend reversal approaches.
Use the Alligator indicator Forex platforms provide as confirmation. What is the confirmation then? The result is one of the best approaches of how to use the Alligator indicator in Forex.
Especially relevant is this system when used with a Japanese candlestick pattern technique.
16/08/ · Equilibrium Lines Of The Alligator Forex Strategy The Alligator logical indicator is a combination of Equilibrium Lines (Moving Averages) that use fractal math and non line are The Alligator is a simple and popular indicator and a trading strategy. The creator is Bill Williams. The Alligator Indicator consists of three moving averages. Their position to each 13/12/ · The Williams Alligator indicator is a technical analysis tool that uses smoothed moving averages. The indicator uses a smoothed average calculated with a simple moving 20/05/ · The three lines that make the Alligator Forex indicator (jaws, teeth, and lips) do exactly that. They follow the price. If the price rises, the three lines follow. If the price The alligator indicator will aid in identifying long or short signals (trends). However, it should always be paired with other technical indicators and analysis to confirm any signals. Long A simple Alligator strategy for the above example would then be: Anticipate your entry point when the Alligator lines are entwined (“sleeping”) and the “CCI” indicator is signalling ... read more
The appearance of the buyer leads to the price increase marked with number 6. He also described the trading strategy of the same name that uses the Alligator indicator. The lines cross again, signaling that the alligator is "sated. What is EMA? Alligator Pullbacks You can determine the length of pullback needed by choosing where price has to pull back to.The other times, the market is more in a trading range condition that can be difficult to trade. Used to check the order in which the tickets are filtered for default ticket filters, e. They follow the price, alligator indicator strategy. This cookie file is set by GDPR Cookie Consent plugin. How about spotting the fake ones?