The alligator indicator is one of the widely used trading indicators, which also acts as a trading system in itself. The alligator indicator was developed by Bill Williams in The 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 03/12/ · Setting up the indicator is easy: Click on the ‘Indicators’ button in the left bottom corner of the trade room and go to the ‘Popular’ tab. Choose Alligator from the list of 30/12/ · First market price needs to cross alligator indicator to from higher to lower. At the same time RSI needs to cross 50 level in downward direction. If two conditions fulfill, then Alligator is a great indicator that will filter range markets, but combining the MACD Trading Strategy with the Alligator is not that straightforward. Before watching this video, it is highly ... read more
This makes it unique because you cannot use a moving average for example to gauge the different waves in a trend. There are many traits of the alligator indicator. For example, traders have come up with terms such as a sleeping alligator when the three lines are entwined. This is nothing but an intersection of all the three lines in the indicator.
However, as the alligator sleeps, the story goes that he gets hungrier. This phase is depicted by the breakout phase of the indicator. Thus, once the alligator gets hungry, the breakout phase is formed. This is when the three lines start to diverge. The distance between the lines starts to grow broader. The volatility phase usually starts at the beginning of a momentum based directional breakout. Once the breakout occurs and the trend is established, it is seen as a phase where the alligator starts to feast.
As the three lines start to converge once again, the alligator is said to be going back to sleep. After the alligator has his full, he then goes back to sleep, suggested by the three lines of the alligator indicator converging. While the above scenario might seem a bit childish, it depicts the way the markets work.
Thus, the phases when the alligator sleeps and wakes up forms a good metaphor for the markets. Ever since the alligator indicator was developed, it has been widely used by some traders as it becomes a trading system by itself. Usually, when you use a trading system, it is widely expected that you use other tools for confirmation.
Bill Williams is a well-known trader in the world of forex and futures and stocks. He is also an analyst and has done some extensive research in the markets. This formed the basis of his creation of various technical indicators. According to Williams, he believed that many trading systems fail because they rely on the predictability of the trends.
He maintains that a good trading system is one which can predict the unknow. After designing numerous trading indicators, Williams created the alligator indicator which reflects this same philosophy. Therefore, traders should not view the alligator indicator as something that works similar to other indicators. His main basis has been that the markets are simple. But in order to succeed a trader often tends to complicate their trading systems by adding numerous indicators and thus creating a complex system.
As you might know, technical analysis is all about understanding past price action in order to predict future price behavior. When it comes to Bill Williams, it was a contrarian approach.
This is one of things that is aptly reflected in his trading system. This is also one of factors that makes the alligator indicator so unique. You will notice that the alligator indicator is nothing but a combination of three different smoothed moving averages each having its own shift into the future periods. This is one of the fundamental differences with the Alligator indicator compared to other trading indicators. Not many indicators shift the periods into the future which could give some understanding into what price will be doing.
As mentioned earlier, the Alligator indicator is very simple in the way it is devised. The indicator basically takes an existing indicator the smoothed moving average and then uses a combination of different lookback periods and different shifts into the future in order to devise the indicator as a complete system.
Sometimes, traders tend to use an oscillator as well alongside the Alligator indicator in order to filter the signals even better. Some of the commonly used oscillators include the Stochastics oscillator or the CCI index. The three converging smoothed moving average basically forms when the markets exhibit low volatility.
Learn To Use Alligator Indicator In Your Trading. February 9, Posted by: CoachShane Categories: Trading Article, Trading Indicators 6 Comments. Markets trend and market range and the 3 lines of the Alligator indicator, known as the jaws teeth and lips, is designed to alert traders to the presence of either of those market states From those states, a trader can determine if they will use a range trading strategy , a trend trading strategy, or wait for a breakout strategy to be used.
What Is The Williams Alligator Indicator? If using a trading platform such as Tradingview, you will have access to the complete indicator. How Does The Alligator Indicator Work? Since the market evolves from trend to range as Williams has stated, we can think of the market much like an Alligator and how it lives in the wild: When the market is ranging, the Alligator is sleeping When the market shows signs of a trend, the Alligator wakes up There comes a time when the Alligator wants to eat.
This is generally a time of low volatility and most traders may want to find another instrument to trade Possible trend forming The lips of the Alligator, the green line, is the fastest moving average and will be the first one a trader will want to monitor.
Trend formed and direction Considering an up trend, the green line lips , crosses the red and sometimes the blue line depending on the market state. Alligator Indicator Explained What Is A Williams Alligator Trading Signal When the 3 lines of the Alligator indicator are intertwined, the Alligator is sleeping. Think of a market that is ranging — we know it will break out and the longer the range continues, the more violent the breakout can be As the green line starts to cross the lips opening , we could be looking at an Alligator getting ready to feed.
Stages Of The Alligator Indicator If the lips green line cross the teeth red and jaws blue line to the upside, consider a bullish Alligator and look for long trades When the lips cross the teeth and jaws to the downside, consider looking for short trades as we have a bearish Alligator potential 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.
Trading Ranges and Breakouts When the Alligator is sleeping, the market is range bound and a range trading strategy may be used which can give you a jump into the market early. Trading Pullbacks In Price Once the lines have shown a direction, you can resort to using a price pattern that is a staple of all traders — pullbacks.
Alligator Pullbacks You can determine the length of pullback needed by choosing where price has to pull back to. Alligator Line Cross The simplest trading strategy and trade signal for the Alligator is to trade the close of a candlestick after it crosses the lines. Candlestick Cross and Close Note the the green line has crossed over the red to the downside. Green line has crossed the red to the downside Short at the low of the candlestick that closed below all 3 lines Close your position when a candlestick closes above all 3 lines As for a stop loss when using the Alligator, consider using a multiple of the average true range or use previous swing high and lows.
Summary The most important part of the Bill Williams Alligator is when the 3 lines are mixed together. Further Reading Hope you have learned how to use the Alligator indicator as a possible technical indicator to aid in your trading. Here are a few other tutorials that you may find of interest: Trade Entry Triggers Trading With The 50 Period Moving Average Where To Place Your Stop Loss. Author: CoachShane.
Shane his trading journey in , became a Netpicks customer in needing structure in his trading approach. His focus is on the technical side of trading filtering in a macro overview and credits a handful of traders that have heavily influenced his relaxed approach to trading. This has allowed less time in front of the computer without an adverse affect on returns.
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RSI is a popular indicator among the traders. This strategy is based on rsi and alligator. These two indicators are normally used as trend indication. So with the help of these indicators, good signal can be generated effectively.
From these strategy, you can get good signal easily. Required Indicators: 1 RSI indicator. click here to know, how to set RSI 2 Alligator indicator. At the same time RSI needs to cross 50 level in upward direction. If two conditions fulfill, then according to this strategy, it will be buy signal Check the chart example of below picture.
On first buy setup, a big bullish candle crossed alligator indicator and RSI was above 50 level. So this was good buy setup. This signal would give at least 60 pips. On second buy setup, two buy conditions fulfill and traders would get around pips from this buy setup. How to get Sell signal First market price needs to cross alligator indicator to from higher to lower.
At the same time RSI needs to cross 50 level in downward direction. If two conditions fulfill, then according to this strategy, it will be sell signal Check the chart example of below picture, on first sell setup, candle started to break alligator indicator. RSI was below 50 level and this is good sell setup. Traders would get 60 pips from this signal.
On the second sell setup, market price broke alligator and RSI was below 50 level. So this is another sell setup and traders would get pips from this setup Preferred Time frame: H1, H4 is preferable. Currency pairs: All pairs. Take profit and Stop loss: Take profit should be based on time frame. Minimum take profit 30 pips, you can target pips profit.
Stop loss need to be placed above swing high for sell signal and below swing low for buy signal. Risk warning: You need to avoid ranging market during following this strategy. You have to follow money management theory for following this trendy strategy. Before using this strategy, you should practice this on demo account. Featured Articles. FOREX TOOLS. Search Contents.
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03/12/ · Setting up the indicator is easy: Click on the ‘Indicators’ button in the left bottom corner of the trade room and go to the ‘Popular’ tab. Choose Alligator from the list of The alligator indicator is one of the widely used trading indicators, which also acts as a trading system in itself. The alligator indicator was developed by Bill Williams in The 30/12/ · First market price needs to cross alligator indicator to from higher to lower. At the same time RSI needs to cross 50 level in downward direction. If two conditions fulfill, then Alligator is a great indicator that will filter range markets, but combining the MACD Trading Strategy with the Alligator is not that straightforward. Before watching this video, it is highly 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 ... read more
The Alligator indicator is one of the several indicators that were developed by Bill Williams. Used to check if the order is ascending or descending for default ticket filters. You could instead look at various oscillators or even the Bollinger bandwidth oscillator which can depict the rising and falling volatility in the price of the security that you will analyze. Your Money. RCuQdhHRBFg session Serves for security purposes to prevent forged requests ATAS. This is depicted by the widening smoothed moving averages. The Delta indicator shows 7 that buyers did not disappear on following candles.The lines cross again, signaling that the alligator is "sated. Necessary Necessary. Finally, trading with alligator indicator, you need to check where you want to apply these numbers. Key Takeaways The Williams Alligator indicator is a technical analysis tool that uses smoothed moving averages. It will also allow you to fine tune your entry price levels for a trade. Or maybe you have a question.