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 name comes due to the fact that the indicator looks like an alligator’s jaws. Traders call this the Alligator indicator or Williams’ Alligator 07/05/ · An alligator is a trend trading tool that uses three moving averages to indicate market conditions. The difference from 3 moving averages with different periods is that in this indicator, they are also shifted horizontally relative to each other. Depending on the period, the lines are called jaws, teeth, and lips Alligator indicator is a trend-following indicator that consists of three moving average lines of 5, 8, and 13 periods, displaced into the future by 3,5, and 8 periods respectively. The indicator behaves like the animal it’s named after —sleeps when there’s no trend, wakes at the beginning of a trend, and bites when the market is blogger.comted Reading Time: 8 mins
What Is The Alligator Indicator & How To Trade With It - The Forex Geek
Williams believed that individuals and institutions tend to collect most of their profits during strongly trending periods. The Alligator indicator uses three smoothed moving averages, set at five, eight, and 13 periods, which are all Fibonacci numbers. The initial smoothed average is calculated with a simple moving average SMAadding additional smoothed averages that slow down indicator turns. Simple moving average SMA :. How the indicator is calculated is important for understanding the inner workings of the indicator.
Luckily, the calculation is not required in practice, the alligator indicator. The Alligator indicator can be added to your charts from the indicator list in your charting or trading platform. The three moving averages comprise the Jaw, Teeth, and Lips of the Alligator, opening, and closing in reaction to evolving trends and trading ranges:. Williams invoked barnyard imagery to describe the indicator, the alligator indicator, noting "even a blind chicken will find its corn if the alligator indicator is always fed at the same time … it took us years but we have produced an indicator that lets us always keep our powder dry until we reach the blind chicken's market.
The indicator applies convergence-divergence relationships to build trading signalswith the Jaw making the slowest turns and the Lips making the fastest turns. The Lips crossing down through the other lines signals a short sale opportunity while crossing upward signals a buying opportunity. Williams refers to the downward cross as the alligator "sleeping" and the upward the alligator indicator as the alligator "awakening.
The three lines stretched apart and moving higher or lower denote trending periods in which long or short positions should be maintained and managed. This is referred to as the alligator "eating with mouth wide open. This indicates the alligator is "sated. The indicator will flash false positives when the three lines are crisscrossing each other repeatedly, the alligator indicator, due to choppy market conditions.
According to Williams, the alligator is "sleeping" at this time. Remains on the sidelines until the alligator indicator wakes up again.
This exposes a significant drawback of the indicator because many awakening signals within large ranges will fail, triggering whipsaws. Meta, the alligator indicator, formerly Facebook, META has an alligator "awakening" signal near the bottom left of the chart, then embarks on a strong uptrend that shows an alligator "eating with open mouth" phase.
On the rise, the price drops to the Jawline, but the indicators do not cross each other. The trend remains up. An alligator "sated" sell signal arrives when the Lips cross below the Teeth and Jawlines and lines intertwine as the price moves sideways. The alligator "sleeps" for some time before a new awakening signal goes off, and the uptrend commences with another "eating with an open mouth" phase.
The the alligator indicator continues to rise but the alligator indicator a weak fashion. Then there is a sell-off and the mouth opens to the downside, signaling a downtrend. The lines cross again, signaling that the alligator is "sated.
The Alligator indicator can be used in any market or time frame. 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 alligator indicator. This is followed by a buy signal to the upside, which results in a brief uptrend. As the price pulls back, the Alligator is sated, and then it opens again for a big uptrend, the alligator indicator.
This is followed by an extended sideways period, in which the indicator lines crisscross back and forth. This is a sleeping phase, and most traders are best to stay away.
At the far the alligator indicator of the chart, the alligator indicator, the Alligator is opening its mouth again, or awakening, signaling a downtrend. Bill Williams' Alligator indicator provides a useful visual tool for trend recognition and trade entry timing, but it has limited usefulness during choppy and trendless periods. Market players can confirm buy or sell signals with a moving average the alligator indicator divergence MACD or another trend identification indicator.
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Your Money. Personal Finance. Your Practice. Popular Courses. Technical Analysis Advanced Technical Analysis Concepts. What Is the Williams Alligator Indicator? Key Takeaways 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 average SMA to start. It uses three moving averages, the alligator indicator, set at five, eight, the alligator indicator, and 13 periods.
The three moving averages comprise the Jaw, the alligator indicator, Teeth, and Lips of the Alligator. The alligator indicator indicator applies convergence-divergence relationships to build trading signals, with the Jaw making the slowest turns and the Lips making the fastest turns.
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Advanced Technical Analysis Concepts Using Bollinger Bands to Gauge Trends. Partner Links. Related Terms. Exponential Moving Average EMA An exponential moving average The alligator indicator is a type of moving average that places a greater weight and significance on the most recent data points. Swing High Definition and Tactics Swing high is a technical analysis term that refers to price or indicator peak.
Swing highs are analyzed to show trend direction and strength. Relative Strength Index RSI The Relative Strength Index RSI is a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions. Double Exponential Moving Average DEMA Definition and Calculation The Double Exponential Moving Average DEMA is a technical indicator similar to a traditional moving average, except the lag is greatly reduced.
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BEST William's Alligator Strategy for Daytrading Forex
, time: 8:39Williams Alligator Indicator Definition
The Alligator indicator has become a popular technical tool that can help traders improve their entry and exit points in the chaotic forex market. More importantly, it can also help you hold onto a position until the trend has run its course. Beginners, as a rule, typically hold onto losses too long and close winning positions far too early 28/07/ · The Alligator indicator is a trend indicator that consists of three lines – smoothed moving averages. Bill Williams called these moving averages balance lines. Each of them depicts a part of the alligator’s mouth: Alligator’s Jaw (blue line) – the slowest moving average. It is a period moving average, which is moved 8 bars forward Alligator indicator is a trend-following indicator that consists of three moving average lines of 5, 8, and 13 periods, displaced into the future by 3,5, and 8 periods respectively. The indicator behaves like the animal it’s named after —sleeps when there’s no trend, wakes at the beginning of a trend, and bites when the market is blogger.comted Reading Time: 8 mins
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