Blue represents the jaws of the Alligator and is set to 13 periods and displaced 8 periods into the future. Using a Forex example, this is a. The Alligator indicator was created by Bill Williams. The Alligator is used to confirm current price trends and their primary direction. Trend indicators attempt to signpost those key times when a trend may be forming. The Alligator Indicator - devised by US trader Bill Williams -. IT IS UNREALISTIC TO MAKE MONEY ON FOREX Another request by default. No failure or delay to trigger any right task requires shall operate I only Administrators and additional training. Simple access hardware and the profile.
Past performance is not a reliable indicator of future results. We mentioned before that there are three key pieces of information shown by the Alligator technical indicator concerning Forex markets which include: the absence of a trend, the formation of a trend and the direction of the trend. Let's discuss each of these three in turn, and see how we can use them within an Alligator indicator trading system. This is a common state in the Forex market and it is indicated by those times when the three lines of the Forex Alligator indicator are close together or entwined.
We can observe this in the highlighted portions of the chart below, where the green, the red and the blue lines all get close and intertwine which each other. This means that the alligator is dormant; in other words, the market is not really doing anything and we are awaiting a change in state. Date Range: 23 August - 31 August A successful awakening of the alligator is observed when the fast green line crosses through the slower ones, the slower lines also follow that direction and all three lines are spreading apart.
When the teeth, the lips and the jaw of the Forex Alligator indicator move wide apart like this, the alligator has stirred from its dormancy and is eating. The longer the alligator has lain dormant, the hungrier it is, and the longer we can expect it to sustain its hunt for food. These periods of persistent trends are when the Alligator technical indicator tends to be more effective. Date Range: 30 November - 27 June The direction is indicated by the movement of the balance lines.
As the green line is our fastest moving average, we expect this to move first, followed by the red line and then, finally, the blue line. The green line crossing above the slower lines represents a buy signal. Crossing below represents a sell signal. If all three move higher and widen, it confirms an uptrend. Alternatively, if the balance lines move downward and widen after a sell signal, it confirms a downtrend.
As the trend comes to an end, the balance lines draw closer together. The fast green line crossing back over the slower lines shows that the alligator is sated and is the signal to take your profit. The key strength of the indicator is the way that it helps you to stick with a persistent trend. One of the drawbacks can be the difficulty in successfully reading the opening signals in a timely manner. The sleeping period, when the lines are closed and entwined, will see many crossovers that look like trading signals.
The key is in looking for the confirmatory divergence of the balance lines and doing so quickly enough to avoid missing out on too much of the start of the trend. Date Range: 4 February - 31 August Subsequently, the second red vertical line shows the green moving average of the Alligator indicator crossing back below the other moving averages. This is our signal to sell. Problems can arise with the timing. If the indicator lags too much at the start of the trend, and the fall or rise is steep, we could potentially miss the entire move.
An example of this can be seen with the third vertical red line on the chart above. The price rises quickly and, by the time the green line has crossed above the other two, we have missed most of the move and it is not long before the lines become intertwined again.
No trading tool is perfect. This means that professional traders are always looking for ways to use multiple indicators together to try and shore up the weak spots. When it comes to the Alligator indicator, for example, some traders might look at a trend indicator that uses a different methodology to see if it confirms the signals.
This would help us filter out the false signals in the sleeping phase of the Alligator technical indicator, and might also improve the timing of the trading signals. Both MT4 and MT5 come with a large selection of indicators by default, but if you want to give yourself a more comprehensive selection of tools, why not try the MetaTrader Supreme Edition plugin?
The MetaTrader Supreme Edition - compatible with both MT4 and MT5 - is a free custom plugin which offers a specially extended version of the popular trading platform and comes with a variety of additional technical indicators! The Forex Alligator Indicator trading system certainly offers more colourful imagery than normal indicators, which some people may find appealing. While it helps in terms of being memorable, the trading rules are a little on the vague side.
It is recommended to rigorously test the indicator before use, in order to determine whether it actually yields positive results for you. The best way to test out what works and what doesn't work is with a risk-free demo trading account.
A demo account allows you to trade with virtual currency in real-market conditions so that you are fully prepared before you use these indicators in the live markets! Click the banner below to open a free demo account today:. About Admirals Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8, financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time.
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We offer classical option for sure trade. Calculation procedure The Alligator uses a set of moving averages with different parameters of the shift. Parameters and control The classical version of the Alligator is included in a set of all trading platforms, settings for creation of moving averages and colour scale which is recommended be not to changed are configured.
Standard version of the indicator The periods, type of moving averages and parameters of shift correspond to Fibonacci's number due to that steadily compensate the effect of mutual delay. The following states are possible: «The Alligator sleeps» All lines move horizontally, are closely bound among themselves and the price fluctuates in the narrow range around red. There are no trade signals. Type of the indicator during the different periods of the market «The Alligator opens a mouth» If the interest of the participants of the market doesn't weaken, then red AlligatorsTeeth begins to react after green, and the slow blue AlligatorsJaw line always develops the last.
For purchase: the price punches the key line from below up and is closed above a point of intersection. Lines have to be directed to the north and be built accurately in order AlligatorsLips While the price moves higher than green line the trend is bull. For sale: the price punches the key line from top to down and is closed below a point of intersection. Lines have to look to the south and be built in order AlligatorsJaw While the price moves under the green line the trend is descending.
Application in trade strategy We will note at once: in case of trade on the Alligator we put Stop Loss obligatory! The Stochastic parameters can be changed for assets with high volatility. Several practical remarks Alligator is successfully used in any trade systems as the trend tool Trading Chaos. Try It Yourself After all the sides of the indicator were revealed, it is right the time for you to try either it will become your tool 1 for trading.
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