Alligator Indicator Explained – What is the Alligator Indicator?

Any one of those does not sound pleasant if you are looking for a big upward bullish move to form on the chart.

This means that the trader has opened the buy order after that has looked "backwards" and has found the buy fractal and after it the second one which will be the stop. 

Green line — 5-bar MA with a 3-bar shift to the future. At the far right of the chart, the Alligator is opening its mouth again, or awakening, signaling a downtrend.

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Alligator and Fractals of Bill Williams There are a lot of signals in the trading strategy of Bill Williams which help a trader to open successful orders but the main of them are those which are shown by Fractals and Alligator indicators.

Above are the unique alligator indicator lines on the chart. Now you need to be aware of where the fractals are being placed on the candles for this strategy concerning this special indicator.

Below is the fractal that we want to take special note of: I drew a yellow circle on this specific up fractal. What is happening here is that the fractal forms a new high to the previous fractal and therefore made an up fractal appear on the candle. You can also trade with the breakout triangle strategy. Any one of those does not sound pleasant if you are looking for a big upward bullish move to form on the chart. As you can see, the price action stayed quiet and did not move up or down drastically these five candles.

That is exacly what you should see when trading this strategy. As you can see if this would have happened in our BUY trade example, then we would have told ourselves that this buy trade is invalidated and we should look elsewhere.

The reason is that this could trigger a long Bearish trend which would not be good if you are attempting to go long here. Any of the two lines of the Alligator indicator have crossed after the identified fractal candle in Step 1. Step 3 Price Action Need to Break Above Fractal Candle That was Distinguished in Step 1 Once you see that five consecutive candles did not make a drastic move to the downside and stay in between the high of the fractal candle and the alligator teeth, then we go ahead and make an entry order.

You can make an entry this way, or if you are sitting in front of your charts live with this occurs, then you can make a market order also. Either one is ok to do because the same criteria is needed. Here is what it will look like: As you can see, I marked where our original fractal was discovered.

What happened after was that there were five or more candles that appeared that did not drift down to the alligator teeth, the alligator lines did not cross, and the price action finally broke above the fractal candle thus triggering a trade. Exit the trade when two of the alligator lines cross over each other.

This most likely means the alligator is going back to sleep and the price action will either head the other way or consolidate. This trade would have landed you a 70 pip winner. This will give you the best opportunity to salvage a trade if the price action would to turn on you and turn into a bearish trend.

You loose some money but your losses are acceptable in comparison to the profit that you will earn when the real movement starts and you are in it. Sooner or later, the Alligator will open its jaws.

It is almost impossible to escape such losses this is the part of any trading system. But you can reduce them if you analyze bigger time-frames than the one on which you place your pending orders. It will allow you not to "feed" the Alligator.

For example the trader enters a short position. Your triggered buy fractal is the fractal start and the price which is one point higher the second buy fractal if to analyze the market from right to left will be the fractal stop level for placing the Stop Loss.

The Alligator indicator is composed of three smoothed moving averages. When the Alligator awakes, the Green line moves first, followed by the Red line, to confirm a breakout in a new direction. In this example, the CCI sent an overbought alert first. The Alligator lagged, but confirmed the signal after a Candle closed beneath the three-line set. The Alligator indicator helps the trader stay in the position for a longer period and works best the longer the period of sleep.

In the above example, you would stay in the trade until a Candle closed above the middle Red line.

 

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Trading The Alligator by Bill Williams By Galen Woods in Trading Setups on December 13, Bill Williams introduced the Alligator which is a system that uses three displaced moving averages to isolate market trends.

Bill Williams' Alligator indicator provides a useful visual tool for trend recognition and deciding when to enter or exit a trade. Bill Williams introduced the Alligator indicator in The Alligator is as much a metaphor as it is an indicator. It consists of three lines, overlaid on a pricing chart, that represent the jaw, the teeth and the lips of the beast, and was created to help the trader confirm the presence of a trend and its direction. 

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Indicator Construction

High Accuracy Bill Williams Fractals Alligator Trading System - There are a lot of signals in the trading strategy of Bill Williams which help a trader to open. Any trading platform will suit for this trading system, as indicators of Bill Williams has long become standard in any terminal. The strategy can be used on any timeframe, but the author recommends the daily chart. Profitunity system consists of indicators: Alligator, Awesome Oscillator (AO) and Fractals.

Apr 21,  · Acceleration Oscillator: Insert -> Indicators -> Bill Williams –> Acceleration Oscillator Entry: When (Alligator) lines are opening we put a buy stop one point above the most recent fractal outside of the lines in trend direction Exit: When (Alligator) lines are closing we are closing too. Profitunity (Chaos) Trading System by Bill Williams. Profitunity (Chaos) Trading System by Bill Williams Basic System On the chart apply following tools Alligator.

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