Alligator Indicator

As the green line continues in one direction, the red line which represents the teeth of the Alligator, begins to separate and move in the same direction – the teeth are opening. If using a trading platform such as Tradingview, you will have access to the complete indicator. This is a state whereby the three lines of the Alligator indicator are intertwined or close together. By now you know that there are three crucial information shown by the Alligator indicator.

• For example, the time of the trend absence or sideways moves relates to the Alligator’s sleeping.
• In long timeframes, on the contrary, there will be fewer signals, and you will have to wait for entry signals for a long time.
• The length is inverse so it will wrap from the longest reference point, hence using phi Moving averages will wrap around the price.

In the past few weeks, we have focused on sharing our knowledge on some of the common https://forexarena.net/ indicators like the Relative Strength Index and Bollinger Bands. We have also focused on some relatively unknown indicators like the Keltner Channel and the Donchian Channel. With us, you can trade forex using derivatives such as CFDs.

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In that case, they point in one direction, then the Alligator has woken up, and the hunt will begin soon. Moving averages, as the name implies, show the average price values over a certain period. Therefore, if MAs are in the same place on the chart and do not show any direction with their slope, then the market is not trending. Green line indicates the balance line of the Lips; it is the weakest level. However, it has the fastest reaction to the price changes.

The consolidation state of the forex market is characterized by the closed mouth of the Alligator. The balance lines of the lips, teeth, and the alligator’s jaws are interwoven. It is the first to react to the changes in the balance of buyers and sellers in the price chart. When the lip line crosses slower MAs, we could assume that the trend is about to start. The jaw is the 13-period smoothed moving average that is shifted into the future by 8 bars.

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The key is in looking for the confirmatory divergence of the balance lines and doing so quickly enough to avoid missing out on too much of the start of the trend. Selecting the Alligator indicator from this folder will give you the dialogue box shown in the image above. The parameters are all set at the standard Alligator technical indicator settings by default.

Depending on the position of the lines, the state of the market can be determined and with the help of additional filters, trading opportunities can be identified. A step by step guide to help beginner and profitable traders have a full overview of all the important skills (and what to learn next 😉) to reach profitable trading ASAP. The indicator makes use of convergence-divergence relationships to develop trading signals. The Jaw makes the slowest turns and the Lips make the fastest turns. In conclusion, the Bill Williams’ Alligator indicator is one of the simplest trading indicators that also works as a technical trading system.

Trading with the Alligator indicator

When the https://forexaggregator.com/ line crosses below the blue, it’s a bearish sell signal, and when the blue line crosses above the green line, it’s a bullish buy signal. This strategy is less risky than other methods, but can often leave some profit on the table by playing it safe. An alligator technical indicator is one of the tools traders implement in trend trading. An alligator isn’t only a name; the indicator consists of teeth, lips, and a jaw. Although it may sound unserious, it provides reliable signals.

The length is inverse so it will wrap from the longest reference point, hence using phi https://trading-market.org/ averages will wrap around the price. Are very important in trading any type of market, including a trending market. With the lips and the teeth separating from the jaw, the Alligator has completely opened the jaw and started feeding.

How to set up the alligator indicator in MetaTrader 4

Here everything becomes individual, and you should act, according to your trading system. The Fractals indicator perfectly complements the Alligator. The combined application of the two Williams’s indicators provides accurate entry points, with the Fractals tool serving as an additional filter. You enter a trade at the fractal breakout when the market trend has already acquired a direction. The Alligator begins to wake up when the distance between the lines begins to increase. On the right side of the chart, we see that the price is trading below the lines, and they acquire a downward direction.

• I personaly use this to see if there is fear in the markets or greed…
• Once satiated, the Alligator closes his mouth once again and goes to sleep.
• The second high must be lower than the first one and be followed by a bearish bar.
• Employing auxiliary indicators reduces the number of false signals and gives an opportunity to enter the forex market with additional confirmation.
• As the three lines start to converge once again, the alligator is said to be going back to sleep.
• The developer believed that individuals and institutions collect most of their profits during strongly trending periods.

When the Alligator is feeding, watch for pullbacks against the main trend direction and trade those moves with a pullback strategy. 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. Then the Alligator woke and an uptrend commenced , the “eating with an open mouth” phase. The price continues to rise extremely until the Alligator became sated and then slept for a brief period and the cycles continue again and again.

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In this situation, a price crossover is a great way to get into the market in the direction of the trend. Since the Alligator indicator can show when a trend is forming, you can use it to trade a breakout strategy. Now, it is time to look at how you can apply what you have learned in developing a suitable trading strategy.

You may often hear that the financial markets are correlated. PrimeXBT products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Investing in or trading gold or other metals can be risky and lead to a complete loss of capital. This guide should not be considered investment advice, and investing in gold CFDs is done at your own risk.

To add the Alligator strategy to the MT4 chart, you need to select the “Insert” menu, click on the “Indicators” tab. Select “Bill Williams” in the “Indicators” menu and select the name “Alligator” from the list. After that, set the required technical indicator parameters or leave the default ones and click “OK.” The indicator will be added to the chart of the trading instrument. If the price consolidates above the jaws blue lines and continues to move in a new direction, the Alligator lines will begin to rebuild and indicate new trading dimensions.