Alligator Indicator Technical Indicators Indicators and Signals

Alligator indicator helps to determine the presence and absence of a trend as well as its direction. With the naked eye you can see that prices do not move in a straight line but rather in peaks and troughs. Here’s a trading system you can apply to trending markets such as the currencies. In the blue rectangle, the Alligator is sleeping and we should not open any positions.

• This can be either the close, open, high, low, median, weighted close, and typical close.
• EneX is signal that give recommendation signals for entry and exit on spot market.
• From our point of view, the best entry points for the short position were the tops marked with number 6.
• The indicator consists of three lines, overlaid on a price chart, that represent the jaw, the teeth and the lips of the alligator.
• When markets begin to trend, traders can look for pullbacks the Williams Alligator lines to take a position, setting a stop below the support level as a point of invalidation.
• Bill M. Williams (1932–2019) was an American trader and author of books on trading psychology, technical analysis, and chaos theory in trading the stock, commodity, and foreign exchange markets.

For example, to trade candlesticks patterns on short-term timeframes in the direction of the trend, which is shown by the Alligator on a higher timeframe. Indicates the entry for the short position, since both the order of the lines and their direction indicate a bearish trend. This entry turns out to be very successful because the price drops sharply. The profit from the short position covers the losses from two previous positions with plenty to spare.

Advantages of Using the Alligator

Plot3 Lips Yellow Plots the Lips exponential moving average. When applied to a chart, this indicator plots three moving averages on a separate subgraph from the price data. Comments and analysis reflect the views of different external and internal analysts at any given time and are subject to change at any time. Moreover, they can not constitute a commitment or guarantee on the part of PrimeXBT. It is specified that the past performance of a financial product does not prejudge in any way their future performance.

• First, you need to look at a chart that is either trending upwards or moving downwards.
• It is possible to close transactions manually on obvious signals from additional indicators .
• Bill Williams created several technical indicators that together are widely used as a foundation for trading strategies.
• 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.
• You should keep these instruments on your radar especially if price action is hinting at an increase in momentum.

Libertex MetaTrader 5 trading platform The latest version of MetaTrader. Libertex MetaTrader 4 trading platform The #1 professional trading platform. You can also customise the parameters and change the MA colours. To remove the indicator from your chart, right click on it and select ‘delete indicator’ in the pop-up window. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. In simple, these shifts are the periods are moved into.

As shown below, the EUR/USD pair reversed its descent when the three periods reversed. A buy signal usually comes when three lines reverses and the jaw remains on the right sides. As the price rises, you should watch as it moves below the green line. As mentioned above, the xtb vs admiral markets who is better in 2021 has three lines.

Range Scalping Using the Williams Alligator

The teeth is the 8-smoothed moving average that is moved five days into the future while the lips is the 5-period smoothed moving average that is moved by 3 bars into the future. In the lower-left of the chart, the Alligator opens up, and an uptrend remains in place for some time. The lines then cross, and two small downtrends develop.

The MACD or “Moving Average Convergence / Divergence” indicator is a momentum oscillator used to trade trends. MACD plots the distance between moving averages and helps traders 8 investment options to get your money working for you identify trend… The course of the moving averages simply identifies the trend direction. If they move down and widen even more, it’s a strong downtrend signal.

Why The Williams Alligator Matters

Like all the moving averages, the alligator is a lagging indicator. Such a lag in getting a trade signal leads to a partial loss of profit. Further, this lag functions as a filter and helps eliminate insignificant and false signals. Another useful feature of this Alligator Alert indicator is that it can draw arrows for buy and sell signals when the three moving averages cross. Shane his trading journey in 2005, became a Netpicks customer in 2008 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 missing MetaTrader feature appears in our Alligator Alert indicator presented below. YouTube channel to find life hacks and ideas that will help you to trade efficiently with the ATAS platform. And you can continue using the program even after the 14-day trial period.

The Williams Alligator indicator is a technical analysis tool that uses smoothed moving averages. Bill M. Williams (1932–2019) was an American trader and author of books on trading psychology, technical analysis, and chaos theory in trading the stock, commodity, and foreign exchange markets. His study of stock market data led him to develop a number of technical analyses that identify trends in the financial markets.

Example of strategy on standard indicators

When the Jaw, the Teeth, and the Lips are closed or intertwined, it means the Alligator is going to sleep or is asleep already. The Alligator indicator was created by Bill Williams. Learn how to trade forex in a fun and easy-to-understand format. The affiliate programme is not permitted in Spain for the commercialisation of investment services and client acquisitions by unauthorised third parties. Deemed authorized and regulated by the Financial Conduct Authority.

See New Trading Dimensions by Bill Williams, PhD. Bars are green when the Awesome Oscillator and Accelerator/Decelerator are both positive. Bars are red when the Awesome Oscillator and Accelerator/Decelerator are both negative. Bars are blue when a squat bar is formed, these indicate a battle between… Bill Williams indicators are simple and quite self-sufficient, however, are most often used together.

How to use Bill Williams Alligator in trading platform

When the Alligator awakes, the Green line moves first, followed by the Red line, to confirm a breakout in a new direction. In this example, the CCI sent an overbought alert first. The Alligator lagged, but confirmed the signal after a Candle closed beneath the three-line set. 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 blue line indicates the Jaw – this one is the strongest line. The Jaws line displays the border of the medium-term trend.

Closer to the top of the chart you see that there is an orange arrow, as the Alligator Indicator starts the clothes it’s jaw again. Furthermore, the histogram on the oscillator has started to drop, suggesting that perhaps momentum is starting to wane a bit. After that, the red arrow signifies the jaw opening yet again for the alligator to eat, while the MACD histogram is starting to drop much lower and well below the zero line. This suggests that there is quite a bit of downward pressure. Once you click Okay, the indicator then appears on the main price chart.

The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. The indicator is derived from the moving average, which is one of the best-used indicators in the market.

Having said that, it’s also important to keep in mind that this is simply a triple moving average system. Bill Williams suggested that when the downward cross occurred, it was when the alligator was sleeping, while an upward cross is the alligator awakening. It’s probably not that important as to whether or not he calls it one thing or the other, because this will follow what’s a bull market and bear market a lot of the same rules that a triple moving average crossover system will. After all, that’s all this is but there are some tweaks to the calculations because they are smoothed. Is when the green line is above the red line and the red line is above the blue line, there is an uptrend, and when the order of the lines is reversed , the market is in a downtrend.

What are the Best Technical Indicators?

Inverse Fisher Transform On Williams %R Since Williams R indicator produces negative values, I preferred to add 50 instead of subtracting 50. Williams %R determines overbought and oversold levels. Williams approached the current behavior of the market instead of looking at past behavior to determine future outcomes.

If the lips cross the other lines in a downward fashion, we have an awakening bearish Alligator. Useful volume analysis indicators in the ATAS platform. They can improve your trading strategy by the classic Alligator 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. Despite the fact that the market is low volatile during the Asian session, the Alligator indicates that traders should be ready to go long as soon as the blue line moves up. When the jaw, the teeth and the lips are closed , the Alligator is tired or it is sleeping.

This guide should not be considered investment advice, and investing in gold CFDs is done at your own risk. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. At both of those arrows, the Alligator Indicator is letting you know that the market is extremely bearish, and you should be hanging on to short positions. In fact, you can even make an argument for the compression between the two red arrows as not quite enough to get you out of the original position. Harness the market intelligence you need to build your trading strategies.

• Bill William created the analogy with the Alligator to describe the behaviour of the market according to the phases of the Alligator’s daily routine.
• This is a 15-minute chart of Intel from Sep 24-29, 2015.
• These include white papers, government data, original reporting, and interviews with industry experts.
• This is when we should go long or short respectively.

Bill William created the analogy with the Alligator to describe the behaviour of the market according to the phases of the Alligator’s daily routine. For example, the time of the trend absence or sideways moves relates to the Alligator’s sleeping. Afterwards, the Alligator wakes up and looks for its prey. The trend strength depends on the length of the sideways trading as the Alligator’s hunger depends on when it was sleeping. The Alligator is always implemented into any trading platform because of its simplicity.