The Alligator is as much a metaphor as it is an indicator. The possibility exists that you could lose more than your initial deposit. The Alligator Forex indicator is the perfect tool for that. In this example, the CCI sent an overbought alert first. Stop for a minute and think of how this indicator functions. This can be a double top or bottom, a head and shoulders pattern or a triangle.
The Alligator indicator is common on Metatrader4 trading software, and the calculation formula sequence involves these straightforward steps: 1) The Alligator’s Jaw, the “Blue” line, is a period Smoothed Moving Average, moved into the future by 8 bars;.
The second and third moving averages are calculated as per the below formula:. The first MA with time period of 13 and shift for 8 bars' forward is called the Alligator's Jaw. It traditionally has dark blue colour on the chart. The second MA called the Alligator's teeth, has a period of 8 and shift equal to 5. It is usually red. The third MA called the Alligator's Lips, has period of 5 and shift equal to 3.
This is a green-colored line see image 1. All the lines of the Alligator technical indicator show levels of price settling on the market under the condition that new factors for different time periods won't impact. In other words a trader should close positions after that. We will be pleased to answer any questions you may have. Huckster Forex Advisors Shop.
The Alligator indicator strategy. Median Price is an arithmetical average of maximum and minimum price of a bar candle: The second and third moving averages are calculated as per the below formula: Description of the Alligator indicator The first MA with time period of 13 and shift for 8 bars' forward is called the Alligator's Jaw. The Alligator indicator by Bill Williams All the lines of the Alligator technical indicator show levels of price settling on the market under the condition that new factors for different time periods won't impact.
The plan was to stay in the trade until we get some signals from the Alligator indicator. I entered on the assumption that I will be hopping into a few hours trade. However, the whole position took more than 30 hours to complete. Notice that the price broke the few times the green line in bullish direction.
However, since I saw that the trend is bigger than usual, I decided to wait for a bigger signal — like a cross between the green and the red line. Therefore I adjusted the Stop Loss order tight and I left the trade for the next morning. When I got up I realized that the trend continues in my favor.
Notice that a cross between the red and the green lines occurred. Then I noticed another cross between the green and the red Alligator indicator lines. However, I also noticed a bearish trend line formed through the last two tops on the chart. Therefore, I adjusted my Stop above that line with the idea that if the price bounces from the trend, I will catch another bearish impulse. This is what happened. The price bounced from the pink bearish line and created another low on the chart.
Then I spot that this is not just a bearish trend line pink , but something like a bearish channel or an Expanding Triangle with bearish indication. Since the price was reaching the lower level of the figure, I assumed that a pullback is coming.
At the same time, the D1 chart was showing that the price is interacting with the Furthermore, on the H4 chart there was another channel, which lower level the price was interacting with. I exited the trade on the assumption of an upcoming pullback. During his bachelor and master programs, Damyan has been working in the area of financial markets as a Market Analyst and Forex Writer.
He is the author of thousands of educational and analytical articles for traders. When being in bachelor school, he represented his university in the National Forex Trading Competition for students in Bulgaria and got the first place among other traders. He was awarded a cup and a certificate at an official ceremony in his university. It is a 5-period Smoothed Moving Average, displaced by three periods to the right.
This is the fastest band. This is the slowest band.
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The Alligator indicator is a great Forex trading tool that has been fascinating traders for a long time. While not a moving average, riding trends is its main quality. This article shows how to use the Alligator indicator in Forex in a profitable trading way. How to trade with Alligator Indicator. Alligator indicator helps to determine the presence and absence of a trend as well as its direction. For an uptrend to be true and valid 3 lines (Jaws, Teeth and Lips) of Alligator indicator must be laid out appropriate way: Jaws at the bottom . As with any technical indicator, an Alligator chart will never be % correct. False signals can occur, but the positive signals are consistent enough to give a forex trader an “edge”.