Bill Williams Alligator Indicator
Alligator Indicator Definition
Alligator indicator is an indicator which signals a trend absence, formation and direction. Bill Williams saw the alligator's behavior as an allegory of the market's one:
- The resting phase is turning into the price-hunting as the alligator awakes so that to come back to sleep after the feeding is over;
- The longer the alligator is sleeping the hungrier it gets and the stronger the market move will be.
For more information how to set the indicator in the terminal please click here
How to Use Alligator IndicatorThe Alligator indicator consists of three smoothed moving averages:
- The Alligator’s jaw or the blue line is a 13-period smoothed moving average shifted into the future by 8 bars;
- The Alligator’s teeth or the red line is an 8-period smoothed moving average shifted into the future by 5 bars;
- The Alligator’s lips or the green line is a 5-period smoothed moving average shifted into the future by 3 bars.
The Alligator is resting when the three averages are twisted together progressing in a narrow range. The more distant the averages become, the sooner the price move will happen.
The averages continuing in an upward direction (green followed by red and blue) suggest an emerging uptrend which we interpret as a signal to buy.
The averages following each other in the reversed order down the slope are a strong signal of an unfolding downtrend so selling at this point would be more than appropriate.
Alligator Indicator Formula (Calculation)
The moving average of Alligator indicator is calculated by using the average price of the bar (candle). The blue line is calculated with a 13-period moving average shifted forward by 8 bars, the red line – with an 8-moving average shifted forward by 5 bars and the green line is calculated with a 5-period moving average shifted forward by 3 bars.
MEDIAN PRICE = (HIGH + LOW) / 2
ALLIGATORS JAW = SMMA (MEDEAN PRICE, 13, 8)
ALLIGATORS TEETH = SMMA (MEDEAN PRICE, 8, 5)
ALLIGATORS LIPS = SMMA (MEDEAN PRICE, 5, 3)
How to use Alligator indicator in trading platform
Use indicators after downloading one of the trading platforms, offered by IFC Markets.