Alligator Indicator

When the alligator’s jaw, teeth, and lips are closed , it means it is tired or sleeping. This is when many traders avoid taking a position because the trend is too weak. A Bollinger Band® is a momentum indicator used in technical analysis that depicts two standard deviations above and below a simple moving average. Alligator indicator is a technical tool developed by Bill Williams. He is an expert technical trader who also creates other indicators such as an awesome oscillator, fractals, gator oscillator, and several other tools. In testing the alligator indicator, I have found that hunting hand in hand with the alligator works better than all the other moving average crossover systems I have used.

• This is the level of the previous bar local highs which shows the past performance of the asset’s trading dimensions.
• The “Trading Chaos” is still popular and has many followers, and the Williams indicators are still popular.
• As the alligator is awakening, that means that a trend is starting to form.
• The Alligator begins to wake up when the distance between the lines begins to increase.

Again, the TEMA is more sensitive to the movement of the price compared to other MAs. The TEMA gives lower number of winning signals, but these signals lead to positions with higher gains per share. The Alligator gives higher number of successful signals, but these signals will often put us in positions, which catch less than half of the trend. In addition, the TEMA can be combined with an extra moving average in order to validate signals. When the distance between the lines begins to expand and we see a bullish candle closing above the Alligator teeth and jaws, we go long.

Alligator Line Cross

This indicator only works in trends, and it should be avoided when you are in a sideways market. It’s based upon the moving averages, so gives you an idea of when a market is trending, therefore it’s relatively easy to see whether or not you should be using the indicator. The indicator is relatively simple to use, so that of course makes it popular as well. The Alligator strategy suggests trading in the trend direction and opening positions at the most profitable levels. In this strategy, the major tools are the Bill Williams indicators, the Alligator, and others, for example, Awesome Oscillator, Fractals. It turns out that when trading with the Alligator, you take almost the entire trend movement.

Candlestick Cross and CloseNote the the green line has crossed over the red to the downside. Remember, these lines are displaced into the future and would have plotted in front of the candlestick we are shorting. At this point, you have learned how to setup and use the Williams Alligator to determine the state of the market and the trend direction. “Displaced” means that the reading is adjusted X bars into the future which is believed to better forecasts future trend direction. The Alligator is a simple and popular indicator and a trading strategy.

The Alligator indicator has three lines – green, red, and blue. The green line tracks closest to the price action, the red line is the middle average and the blue line is the furthest from the price action. Alligator Alert Indicator for MetaTrader 5 is a plugin that allows you to set up alerts for Alligator moving averages coming one top of the other on your MT5 chart. It has exactly the same features as the version of the indicator for MT4. Bill Williams created several technical indicators that together are widely used as a foundation for trading strategies.

Alligator Indicator Strategies

To begin with, let’s consider the classic use of the Alligator without using other analysis trading tools. That is, the momentum indicator is used in its original form. At this moment, you cannot open positions against the trend. Traders who enter trades against the trade by mistake are doomed to failure.

Therefore, be prepared to close positions when the red and green lines start moving in the opposite direction of the previous trend. Ranging Market ConfirmationWhen the indicator’s lines intertwine with each other and move horizontally, the market is ranging and no trend is present. The alligator is sleeping, and its mouth is closed, to put it metaphorically. It is wise to refrain from trading and wait till a trend begins. Alligator Teeth shifting periods – the parameter allows specifying the number of periods, over which the medium-period moving average indicator is to be shifted into the future.

That’s because you’ll still get exposure to the full value of the trade, and both your profit and loss is based on the full value. It uses three moving averages, set at five, eight, and 13 periods. The three moving averages comprise the Jaw, Teeth, and Lips of the Alligator. If lines are intertwined or laid in the wrong order or are moving close together as one, it means that Alligator is sleeping with its mouth closed. The Williams Alligator is easy to read when a trader focuses on the expansion and contraction of the bands. Imagine a real-life alligator that is asleep and could awaken when a market trend starts.

How to trade with Alligator Indicator

In this article, we will keep the author’s metaphoric terminology. Fans of the Tradingsim blog know that I am big on volume. Volume is probably one of the oldest off chart technical indicators you will find in technical analysis. This is a 15-minute chart of Intel from Sep 24-29, 2015. As you can see, the TEMA bounces above and beneath the price action.

The weakness in the indicator is that timing may lag due to its future positioning, the reason for attaching a momentum indicator to anticipate the Alligator’s signal. The CCI alerts signaled overbought or oversold conditions for each occasion. Candlesticks also provide additional insights into what the expectations of the market might be going forward. The indicator is derived from the moving average, which is one of the best-used indicators in the market.

How to set up the alligator indicator in MetaTrader 4

The alligator indicator will aid in identifying long or short signals . However, it should always be paired with other technical indicators and analysis to confirm any signals. Bill Williams, the trader who developed the alligator indicator, believed that markets only follow a trend 15% to 30% of the time. Let’s explore the alligator indicator and see how it’s used to identify trends in forex trading. Bill Williams’ Alligator indicator provides a useful visual tool for trend recognition and trade entry timing, but it has limited usefulness during choppy and trendless periods.

That is, it has been relevant to https://forexanalytics.info/ gold up to now. The above figure displays the hourly timeframes of the BRENT oil price chart. In the hourly timeframe, I prefer using the following settings of the indicator 21;13;8, but I will cover it in detail later. In a downtrend, the lines are arranged in the opposite order.

Granted, they are https://forexhistory.info/ moving averages, and therefore they are also susceptible to the same type of whipsaw trading situations that any moving average system will suffer. This oscillator is a bit different from many other oscillators, as it’s a dual oscillator. Candlestick analysis can also be useful, just as it’s with any other technical indicator. For example, a hammer or a shooting star may make for a better signal than just a simple spreading of moving averages by itself.

The beginning of an uptrend is a signal to consider closing of opened Sell positions and opening of Buy ones. Conversely, the beginning of a downtrend is a signal to consider closing of opened Buy positions and opening of Sell ones. It is a 13-period smoothed moving average, displaced 8 periods to the right.

How to add the Alligator Indicator

However, it’s worth knowing how the indicator is built to interpret its mechanics. Number Name Default Color Description Plot1 Jaw Cyan Plots the Jaw exponential moving average. Plot2 Teeth Teeth Plots the Teeth exponential moving average.

All things being equal, the Alligator seriesis a set of indicators that can be useful if you understand how they are printed. The Alligator strategy is a simple technical analysis tool and an efficient indicator, suitable for a beginner trader. It indicates the market state, defines the support and resistance levels to enter a trade. It helps to enter a trade at the very beginning of a trend. The first type of trading with the Bill Williams’ Alligator indicator suggests you don’t use any additional trading tools.

There is no guarantee that the https://day-trading.info/ will go up indefinitely if the green line is above the red and blue line and vice versa. Trending markets are less common than sideways markets. Williams advised traders to avoid trading while the alligator is asleep and trade only when it’s awoken, to enhance their chances of making a profitable trade. Intraday is a trader closing a position on the same day as the position opening. In using the Alligator for intraday trading traders need additional indicators such as an oscillator to add to the trading signal filter.

If there is an upward intersection, it means that the price will uptrend, on the other hand, if the intersection is down, the price will downtrend. The indicator alligator has three main lines, which are called the jaw, teeth, and lips. The jaw is blue, the teeth are green, and the lips are red. ■ Hypothetical performance results have many inherent limitations, some of which are described below. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight.

Alligator Indicator

We will also see the lips and the jaw start to turn in the direction of the green line. Many traders will enter the market following a candle close above/below all 3 lines at this point. The indicator has been tested for several decades, therefore, it has a strong track record of use by professional traders.

• Greetings Colleagues Following some recommendations and ideas I share this moving average, put all of them together The length calculation is automatic there is only one input.
• Forex data can be compared to fuel and software that uses this data is like an engine.
• A doji is a trading session where a security’s open and close prices are virtually equal.

The Bill Williams Alligator Indicator is a trend-following indicator. As its creator stated, the entire idea of the markets is that they tend to trend between 15% and 30% of the time. Join thousands of traders who choose a mobile-first broker for trading the markets. The moment of crossing by the price of all three lines will be a strong signal for an entrance to the market; the transaction on kickback from AlligatorsTeeth looks riskier. SMMA (MedianPrice; 8; 5) – the similar moving average displaced on 5 bars forward; AlligatorsTeeth, color – red.