Alligator Indicator (How To Use It)
Alligator is the indicator which is designed to show a trend absence, its formation and direction. Bill Williams saw metaphorical resemblance between alligator’s behavior and the allegory of the market’s one: sleeping gives way to price-hunting after which it’s again time to sleep. The longer the alligator sleeps the hungrier it becomes and logically, the stronger the market movement will be.
The indicator includes 13-, 8- and 5-period smoothed moving averages each with its own displacement (8, 5 and 3 bars respectively) which are colored blue (jaws), white (teeth) and red (lips) thus representing the alligator’s jaw, teeth and lips.
Alligator is sleeping when the three averages are intertwined progressing in a narrow range. Therefore, more distant averages indicate sooner price movement.
To Buy:
If the averages go on in an upward direction (red followed by white and blue) this shows an emerging uptrend interpreted as a signal to buy.
To Sell:
If the averages go on in an downward direction (red followed by white and blue) this shows an emerging downtrend interpreted as a signal to sell.
See two examples on GBPUSD 15 minute chart:
1st) possible sell trade was during Tokyo session, with low liquidity and low volume, for 50 pips. Would or should you trade this? No or Yes.
2nd) possible buy trade was during London and NY session, with high liquidity and high volume, for 70 pips. Would or should you trade this? No or Yes.
You can use just 15 minute naked charts with only this Alligator Indicator on it. If These alligator lines are in correct buy or sell order during either London session or London/New York overlap session- I would highly recommend you make this trade. Alligator Indicator can be used on all charts.
The indicator includes 13-, 8- and 5-period smoothed moving averages each with its own displacement (8, 5 and 3 bars respectively) which are colored blue (jaws), white (teeth) and red (lips) thus representing the alligator’s jaw, teeth and lips.
Alligator is sleeping when the three averages are intertwined progressing in a narrow range. Therefore, more distant averages indicate sooner price movement.
To Buy:
If the averages go on in an upward direction (red followed by white and blue) this shows an emerging uptrend interpreted as a signal to buy.
To Sell:
If the averages go on in an downward direction (red followed by white and blue) this shows an emerging downtrend interpreted as a signal to sell.
See two examples on GBPUSD 15 minute chart:
1st) possible sell trade was during Tokyo session, with low liquidity and low volume, for 50 pips. Would or should you trade this? No or Yes.
2nd) possible buy trade was during London and NY session, with high liquidity and high volume, for 70 pips. Would or should you trade this? No or Yes.
You can use just 15 minute naked charts with only this Alligator Indicator on it. If These alligator lines are in correct buy or sell order during either London session or London/New York overlap session- I would highly recommend you make this trade. Alligator Indicator can be used on all charts.
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