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Alligator Indicator
2.8/5 (17 votes)

Alligator  Indicator  (Alligator’ Bill Williams) is a trend indicator and signals about the beginning of a new trend. It includes a series of moving averages, which use fractal geometry and nonlinear dynamics.

After examining all the features of this indicator, you can get a powerful tool for analysis of forex. A distinctive feature of this indicator is that it works on almost all timeframes, which makes it universal.
Graphically, Alligator Bill Williams consists of three moving averages with different parameters (5,8,13) and colors (blue, red, green).


Alligator Indicator shows the start of a new trend, when the moving averages start to diverge in different directions. If the lines are intertwined - that is side trend.

We construct an alligator indicator on the following principles:


The calculation takes the average price of the average price = (maximum + minimum) / 2

Jaw Alligator (blue line) = smoothed 13-day moving average, shifted by 8 candles.

Alligator's teeth (red line) = smoothed 8-period moving average, shifted by 5 candles.

Alligator's Lips (green line) = smoothed 5-period moving average, shifted by 3 candles left.

Thus Alligator indicator is a combination of three moving averages with different periods and different shifts.

The main signals to indicator Alligator:

1. The strength of trend. Defined by the time the long moving averages are intertwined. The longer the time they are intertwined, the stronger the trend.
2. Preparation for entrance into the market. If the amplitude of prices began to increase and the distance between the moving average is also increasing, it is prerequisite to the beginning of a new trend.

3. Entrance to the market. Typically, the alligator  indicator is not used to enter the market. It should be confirmed as a fractal, directed upwards.
4. Stop-loss. Stop-loss is determined by the level of risk. Stop-loss can be set at any line of moving averages. But we must bear in mind that setting stop-loss at the shortest five-period, is fraught with false breakdowns, and 13-period - the presence of large losses.
Alligator indicator is a profitable trading system and tactic.



 
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