In the hourly timeframe, I prefer using the following settings of the indicator 21;13;8, but I will cover it in detail later. On the left side of the chart in the above picture, we see that the Alligator is waking up, a buy signal appears, followed by a powerful uptrend that characterizes the stage when the Alligator is eating with an open mouth.

After some time, the price tests two lines of the indicator: green and red, but the direction of these lines is still up, so the market grows by a few more points. Next, the price breaks through the Alligator lines and updates the local minimum. The lip line crosses the teeth and jaw line, signaling the end of the uptrend. It's time to take the profit. The next stage of the Alligator trading is sleeping.

At this stage, the market is trading flat. It is not recommended to trade in the sideways trend. After sleeping, the Alligator is awakening. The mouth begins to open, and another uptrend starts. When the green line is above the red one and the red is above the blue, and the price is trading above all the Alligator lines, a buy signal is generated. When the price hits the highest high in the chart, the price enters a consolidation range. The green line crosses the red one, and the red line crosses the blue one.

The Alligator is falling asleep. The Alligator begins to wake up when the distance between the lines begins to increase. On the right side of the chart, we see that the price is trading below the lines, and they acquire a downward direction. It is a sell signal in the Alligator trading strategy. The downtrend does not last long, and the lines cross each other in the opposite direction.

It is time to exit short trades and turn up. The last buy signal appears on the right side of the chart, immediately after the sales are closed. Alligator trading strategies come into two groups.

The second type of trading strategy employs additional filters to spot entry points. Employing auxiliary indicators reduces the number of false signals and gives an opportunity to enter the market with additional confirmation. To begin with, let's consider the classic use of the Alligator without using other analysis tools. That is, the indicator is used in its original form. Open the chart of any trading instrument in the LiteFinance Personal Profile.

I will use the gold price chart as an example. It is clear from the chart, the XAUUSD has been trading in a downtrend up to now.

All the attempts to drive the price up have been absorbed. That is, it has been relevant to sell gold up to now. At the end of the trading session on January 18, — the beginning of the trading session on January 19, , the Alligator fell asleep. Starting from the European trading session, the Alligator begins to wake up, the lines start to line up. During the first trading hours of the European session, the price closes above the Alligator's mouth.

We notice this moment and decide to look for an entry point to buy gold. Starting at terminal time on January 19, the price begins to decline to test the support area formed by the Alligator lines. After the price tested the area of lines congestion support , and after the candlestick closed right at the levels at , we decide to open a long position with a stop loss below the local low of January 18 at The position opening price is There is no trading activity at the US session; the market participants are accumulating trading volume.

On the new trading day of January 20, the market closes at the price rise. At the European session, there was a try to reverse the trend down. The trend continues. Just before the US session, the trade is exited with a Take Profit at This Take Profit level was not chosen randomly. This is the level of the previous local highs. The target of an uptrend is to break through the important high. As we use the Alligator indicator alone, without any additional filters, the stop-loss orders should be placed beyond the local lows and highs, depending on the trend.

Take Profit levels are set at the breakthrough of important high and lows. You can download the Alligator indicator for the MetaTrader on the MetaQuotes official website. MA Method: Smoothed. This strategy is a part of Bill Williams Profitunity trading strategy. Profundity could be a bit complicated for beginner traders, but the Alligator and Fractals trading strategy will suit traders of any level.

The Fractals indicator perfectly complements the Alligator. You enter a trade at the fractal breakout when the market trend has already acquired a direction. This is a trend-following strategy. You spot the moments when the price momentum begins and try to enter at the momentum inception. When the market is trading flat, neither the Alligator alone nor the combination with Fractals will not work.

The strategy works on any financial instrument, be it forex, commodities, or cryptocurrencies. The best timeframes to apply are H1, H4 and D1. In shorter timeframes, there will be many signals, but the quality of such signals will be bad: a lot of market noise, a lot of false signals.

Using the W1 timeframe, you will have to expect an entry signal for weeks or even months. Let us see the optimal settings to trade with the Alligator and Fractals indicators on the H1 timeframe, which allows us to trade intraday or hold trades for three days. You can choose the colors and the thickness of the lines as you want.

The Fractals indicator looks like an arrow above the Japanese candlestick up or below the candlestick down on the chart. It indicates the high or low of the price. The Fractals indicator does not require setting parameters. You only need to set the display color and size of the icons. To enter a buy trade, the Alligator should be waking up. The lip line should break through the teeth line upside, and the teeth line should cross the jaw line from bottom to top. You wait for the moment when the hourly candlestick breaks through the last formed upward fractal and closes above the high.

At this moment, you open a buy position. First of all, we determine the place of placing Stop Loss. It is placed below the low of the last formed descending fractal. We calculate the Take Profit price in such a way that the distance from the trade entry point is twice as long as the distance to the stop loss. There are other variations of setting Take Profit: at the breakthrough of any significant high, at a distance three times greater than Stop Loss, at a strong level of a longer timeframe, etc.

I usually use the method described above. A take profit of two times larger than the potential stop is not bad, and you shouldn't be greedy. To enter a sell trade, the Alligator lines should start sloping down, and the Alligator should be waking up. The Lip line should be below the Teeth, and the Teeth should be below Jaw. The price should be trading below all the Alligator lines. Expect when the hourly candlestick breaks through the most recent downward fractal and closes below.

Open a sell position at this moment. The trade is moved to the breakeven, according to this strategy, when the Jaw line the blue one is below the entry price for a sell trade and above the entry price for a buy trade. Why should you move the order to the breakeven zone in this case?

It is because the Jaw line is responsible for the trend border in the timeframe you trade. If the line is broken out, the trend is likely to change. In this case, you should look for an entry in the opposite direction. There is no point in holding the trade even if the Stop Loss is set beyond the blue. The strategy suggests not every trade will reach the set Take Profit, and it is normal.

If the market conditions change unexpectedly, traders exit trades manually. Alligator falls asleep. This pattern of indicator behavior suggests that the trend has been exhausted, and it is not clear whether it will continue in the future. It is better not to risk, and when a new signal appears in the same direction, enter a new trade.

Price breaks through the Jaws line. This indicates a possible trend change. If the price consolidates above the jaws blue line and continues to move in a new direction, the Alligator lines will begin to rebuild and indicate a new direction for trading.

Some traders close the trade manually if the instrument reaches the important and strong level on the longer timeframe chart. Another reason to exit a trade manually if the price passes the average daily move suitable for intraday traders.

There could be other conditions. Here everything becomes individual, and you should act, according to your trading system. The candlestick, on which the Signal Fractal was formed, should not touch the Alligator indicator lines. If the candlestick, on which the fractal was formed, touches the indicator, then such a fractal is considered invalid, and the signal is not traded. Different Alligator indicator settings apply to trading in different timeframes.

I should note that the longer is the timeframe, the more reliable are the signals generated. But in this case, there will be fewer signals. And vice versa, the shorter is the timeframe, the more there will be signals, but the false signals will be numerous.

Personally, I prefer to use the indicator on the H1 timeframe. This is the optimal timeframe for short-term trading with a trade holding time of 1 to 5 days. A moderate amount of market noise, combined with frequent and clear signals for currency pairs, makes it possible to focus on a few popular instruments and trade without psychological stress. These are the Alligator indicator default parameters offered in the LiteFinance client profile.

On the timeframes of 4 hours and longer, there is less market noise; therefore, more reliable trading signals from any forex indicators appear. The drawback is that it takes more time to wait for the signal. To compensate for this disadvantage, the Alligator indicator should be used with the standard parameters recommended by Bill Williams:.

These are the generally accepted Alligator settings. Any MetaTrader terminal offers such parameters by default. You can apply the Alligator with the standard parameters of 13;8;5.

But there will be many false signals in this case. You will need additional tools, for example, oscillators or the Fractals indicator, to filter out false signals. Let's go the other way and take the periods even longer than with the settings for the H1 timeframe. We shall take the following numbers from the Fibonacci sequence: 34 for the period and 21 for the shift into the future.

These settings reduce the market noise and filter signals. With these settings, you will get a couple of reliable signals for day trading, which is still good for a day trader. It should be borne in mind that the shorter the working timeframe, the greater values should be set for the indicator formula.

The longer the timeframe, the smaller the values can be set into the formula. Before applying the new Alligator parameters in real trading, you need to test them on a demo account or on historical data.

A manual strategy tester will suit the best. The Alligator indicator allows a trader to define the ongoing market trend. It generates the entry points at the momentum inception and signals the trend exhaustion. You can think that the Alligator is a complete trading strategy, but it is not so. You need additional filters to detail the entry and exit points. For example, you can employ oscillators or other tools, such as Fractals or Price Action patterns, volume indicators, and so on.

Listed below, there are primary advantages and disadvantages of the Alligator, for you to decide if the Alligator trading strategy suits you or not. To make up a profitable trading system, you need to be able to combine the Alligator with other indicators. You need additional entry filters; otherwise, there will be many false signals in the sideways trend. It is clear from the above chart that the Alligator has more advantages than disadvantages.

Alligator is a straightforward indicator, included in most trading platforms by default. This suggests that even a beginner can trade with the Alligator. However, for more profitable and comfortable trading, a newbie will have to master other analytical tools in order to detail entry points and filter false signals.

Bill Williams' Alligator indicator identifies the trend, flat and the flat end, which is an undoubted advantage over other indicators that often lag behind and generate a signal when the price has already passed a large number of pips in the chart. It turns out that when trading with the Alligator, you take almost the entire trend movement.

A significant flaw is that you need to adjust the Alligator parameters for each timeframe individually. Of course, you can use default settings. However, with this approach, there will be a lot of signals in short timeframes, half of which will be false. In long timeframes, on the contrary, there will be fewer signals, and you will have to wait for entry signals for a long time. I have collected for you comments written by real traders on the various forums where Alligator is discussed:.

Summing up the pros and cons section, I want to emphasize the following: Alligator is not suitable for all traders. However, I suggest everyone should study and try to use the Alligator. At least, studying the Alligator will be useful for self-development and understanding of the working principles. Most of the positive reviews boil down to the fact that the Alligator indicator is simple and its signals are clear.

There is no double interpretation. It is clear when to open a buy or sell position and when to close. Critics argue that Alligator was developed for the stock market a long time ago. It will not work alone, and you will lose your deposit in the flat. It is based on the moving averages, i. And the moving averages themselves are already a derivative of the price. As with any analytical tool and any trading strategy, there are many followers and many haters.

Forex Alligator is a technical indicator that the market stages: trend, flat, the end of flat. The indicator generates trading signals to open a position to buy or sell at the momentum inception, providing an advantage to the trader. It also can identify the dynamic support and resistance levels, where it is profitable to open positions.

The alligator was developed by an American trader Bill Williams. Wait until the Alligator wakes up and all its lines arrange in a particular direction. The lip line should be above the teeth line in the uptrend and below — in the downtrend.

Likewise, the teeth line should be above below the jaw line correspondingly. It is also recommended to confirm the entry point using oscillators or other indicators. First, analyze the stage of the Alligator cycle — if it is sleeping, waking or eating.

If the Alligator is waking up, look for an entry point. If the Alligator is falling asleep, exit the trade. Do not trade when the Alligator is sleeping. For long timeframes H4 — W1, standard settings suit: Jaws, Teeth, Lips: 13;8;5, shift 8;5;3.

For timeframes М15 — Н1 use the following settings: 21;13;8, shift 13;8;5. For a 5-minute chart, you can use the settings: 34;21;13, with the shift of 21;13;8. You should test any settings on the historical data before you apply them in real trading. The Alligator is a simple and efficient indicator, suitable for a beginner trader. It indicates the market state, defines the support and resistance levels to enter a trade.

It helps to enter a trade at the very beginning of a trend. It is often required to use additional filters for trading signals. Without filters, it could send many false signals and cause losses. You need to adjust settings for each trading style and timeframe individually.

You should not trade with the Alligator when the market is trading flat in a wide trading range. You trade in short timeframes, use the indicator with care, applying additional filters fractals or Awesome Oscillator , and selecting parameters for each line. It depends on the timeframe where you use the Alligator. If you trade in long timeframes H4 — D1 , the signal period will last from one week to one month. When you trade on a one-hour chart, the period ranges from one to four days.

When you work in shorter timeframes, a trading signal works out during one or two trade sessions. The Alligator strategy suggests trading in the trend direction and opening positions at the most profitable levels. In this strategy, the major tools are the Bill Williams indicators, the Alligator, and others, for example, Awesome Oscillator, Fractals.

The strategy is simple and suitable for beginners. The Alligator is often used together with the Fractals indicator. He created the indicator on the rule that the asset should trend between 15 and 30 percent of the time. They do this while stuck in a tight trading range the other 85 and 70 percent of the time. The creator was sure that the former is when most institutional traders book most of their profits.

Also, the moving averages that make up the Alligator indicator can often act as dynamic resistance or support. You can use it as a buy or sell signal depending on which way the lines crosses. Also, if candlesticks close above or below the lines of the indicator. Three lines make up the indicator, overlaid on a pricing chart. Williams created it to assist traders in confirming the presence of a trend and its direction. The Alligator indicator can also assist technical traders to determine impulse and corrective wave formations.

But it works best when combined with a momentum indicator. Three smoothed moving averages make up this indicator. The Green line moves first when the Alligator wakes up. The red line follows, to confirm a breakout in a new direction. The CCI sent an overbought alert first. The Alligator lagged, but confirmed the signal after a candle closed below the three-line set. The weakness in the indicator is that timing may delay as a result to its future positioning.

This is why you need to attach a momentum indicator to anticipate the signal of an Alligator. The Alligator helps traders remain in the position for a longer time and works best the longer the sleep period. In the above example, you would remain in the trade until a candle ends over the middle Red line. Other traders have included their ideas to enhance the reliability of this indicator.

The indicator makes use of convergence-divergence relationships to develop trading signals. The Jaw makes the slowest turns and the Lips make the fastest turns. The Lips crossing down through the other lines indicates an opportunity of a short sale. While crossing upward indicates an opportunity to buy. The indicator provides signals when the three lines — Jaw, Teeth, and Lips meet and separate.

They signal a change in trend. When the three lines diverge widely, a trend is strong indicating that the mouth of the alligator is being fed.

This is according to Williams. But when the three lines start narrowing and converging, it shows that a trend is weakening and may soon reverse. It also shows that a strong move is near. Traders will then want to observe for a cross of the blue and green lines. They also observe for a close of a candle through the lines of the indicator before taking action.

No trading tool is perfect. This means that traders are always looking for means to apply various indicators. Some traders may look at a trend indicator that uses a different method to see if it confirms the signals. This is in relation to using an Alligator indicator for instance. This will help get rid of false signals in the sleeping phase of the Alligator indicator. It might also improve the timing of the trading signals. It is common for traders to get caught up in market chop when using the Williams Alligator.

According to Williams, during that situation, the alligator is still sleeping and is yet to awaken. This suggests that traders need to wait for other confirmation. They should also wait for the price to reflect the trend change signaled by the indicator.

Traders should try to look at a mouth opening during price rise or decline. They slowly close once again when volatility dwindles, showing a potential trend change ahead due to the current trend weakening. Most of the charts you can see on the website come from there. They let you freely chart almost any asset with all indicators you could think about.

Click here to get start on TradingView for free! Williams Alligator indicator is a complex, but very important and profitable technical analysis tool. One of the most legendary forex traders to ever live made this indicator. Traders can use it across forex, commodities, stock indices , and cryptocurrencies — among the many financial assets. Trading software can be expensive, but some platforms feature built-in charting tools right within the trading dashboard.

This offers incredible value for traders. Applying tools such as the Williams Alligator and stop-loss protection makes it possible for traders to grow their profits quickly, safely, and using very little starting capital.

Trend indicators. The late, iconic forex trader, Bill Williams made the Williams Alligator technical analysis indicator in He has given the indicator his name. He was also created other leading indicators commonly used by traders today. The Alligator indicator follows the premise that financial markets and individual securities trend just percent of the time. While grinding through sideways ranges the other percent of the time.

The developer believed that individuals and institutions collect most of their profits during strongly trending periods. Click here to get started for free with TradingView! The Alligator is as much a metaphor as it is an indicator. Three lines make the indicator, overlaid on a pricing chart. They represent the jaw, the teeth, and the lips of the beast. He created it to assist traders confirm the presence of a trend and its direction.

The indicator can also assist traders designate impulse and corrective wave formations. But it works best when used together with a momentum indicator. If you mix the three lines, the mouth of the Alligator closes and traders say it is sleeping. As it sleeps, it gets hungrier by the minute, waiting for a breakout from its slumber when it will eat. When the trend takes shape, the Alligator wakes and begins eating. Once full, it closes its mouth once again and goes back to sleep.

The Alligator indicator makes use of three smoothed moving averages , set at 5, 8, and 13 periods. They are all Fibonacci numbers. The creator of the indicator was an early pioneer in financial market psychology. He made some of the most widely used technical indicators today. You can use the Williams Alligator indicator to find the absence of a trend. Also, trends that are starting to form and markets that have started trending.

Technical traders can use this information to decide when to enter or leave the market. He created the indicator on the rule that the asset should trend between 15 and 30 percent of the time. They do this while stuck in a tight trading range the other 85 and 70 percent of the time. The creator was sure that the former is when most institutional traders book most of their profits.

Also, the moving averages that make up the Alligator indicator can often act as dynamic resistance or support. You can use it as a buy or sell signal depending on which way the lines crosses. Also, if candlesticks close above or below the lines of the indicator.

Three lines make up the indicator, overlaid on a pricing chart. Williams created it to assist traders in confirming the presence of a trend and its direction. The Alligator indicator can also assist technical traders to determine impulse and corrective wave formations.

But it works best when combined with a momentum indicator. Three smoothed moving averages make up this indicator. The Green line moves first when the Alligator wakes up. The red line follows, to confirm a breakout in a new direction. The CCI sent an overbought alert first. The Alligator lagged, but confirmed the signal after a candle closed below the three-line set. The weakness in the indicator is that timing may delay as a result to its future positioning. This is why you need to attach a momentum indicator to anticipate the signal of an Alligator.

The Alligator helps traders remain in the position for a longer time and works best the longer the sleep period.

In the above example, you would remain in the trade until a candle ends over the middle Red line. Other traders have included their ideas to enhance the reliability of this indicator. The indicator makes use of convergence-divergence relationships to develop trading signals.

The Jaw makes the slowest turns and the Lips make the fastest turns. The Lips crossing down through the other lines indicates an opportunity of a short sale. While crossing upward indicates an opportunity to buy. The indicator provides signals when the three lines — Jaw, Teeth, and Lips meet and separate. They signal a change in trend. When the three lines diverge widely, a trend is strong indicating that the mouth of the alligator is being fed.

This is according to Williams. But when the three lines start narrowing and converging, it shows that a trend is weakening and may soon reverse. It also shows that a strong move is near. Traders will then want to observe for a cross of the blue and green lines. They also observe for a close of a candle through the lines of the indicator before taking action.

No trading tool is perfect. This means that traders are always looking for means to apply various indicators. Some traders may look at a trend indicator that uses a different method to see if it confirms the signals.

This is in relation to using an Alligator indicator for instance. This will help get rid of false signals in the sleeping phase of the Alligator indicator. It might also improve the timing of the trading signals. It is common for traders to get caught up in market chop when using the Williams Alligator. According to Williams, during that situation, the alligator is still sleeping and is yet to awaken. This suggests that traders need to wait for other confirmation.

They should also wait for the price to reflect the trend change signaled by the indicator. Traders should try to look at a mouth opening during price rise or decline. They slowly close once again when volatility dwindles, showing a potential trend change ahead due to the current trend weakening.

Most of the charts you can see on the website come from there. They let you freely chart almost any asset with all indicators you could think about. Click here to get start on TradingView for free!

Williams Alligator indicator is a complex, but very important and profitable technical analysis tool. One of the most legendary forex traders to ever live made this indicator. Traders can use it across forex, commodities, stock indices , and cryptocurrencies — among the many financial assets.

Trading software can be expensive, but some platforms feature built-in charting tools right within the trading dashboard. This offers incredible value for traders. Applying tools such as the Williams Alligator and stop-loss protection makes it possible for traders to grow their profits quickly, safely, and using very little starting capital.

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First Name. Get All Tips for Profitable Trading. The Moving Average Convergence Divergence MACD is both a momentum and trend following indicator. It is calculated by A SMA Simple Moving Average indicator calculates the average of prices for a given number of periods. The SMA is used The Aroon indicator is composed of two line:An up line which measures how far is the previous highA down line wich The Mcginley Dynamic indicator is an indicator that is based on moving average line indicator with a soothing There are various technical indicators that have made the analysis of the financial markets remarkably easy.

Some of If you have an interest in financial trading, you must have knowledge of two concepts, moving averages and volume Pre-register now and receive the candlestick patterns statistics ultimate ebook for free before anyone else! Williams Alligator Indicator: The Complete Guide Trend indicators. The Williams Alligator indicator is composed of 3 lines. Each line is a Moving Average is a different period It helps traders understand the market trend and potential reversal.

When the fastest line is above the middle one which is above the slow one, trend is up.

It is the first to react to the changes in the balance of buyers and sellers in the price chart. Then the lines begin to line up in the trend direction, one after another: first is the green line, then — the red one, teeth and lips, and then — the blue one, the jaw. The lip line crosses the teeth and jaw line, signaling the end of the uptrend. The built-in implementation of the alligator is incorrect. This is depicted by the widening smoothed moving averages.

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