Bill Williams Indicators | Chaos Theory



To understand the overall structure of the market B. Williams advised to analyze the market through the following five dimensions:

  • Fractal (phase space)
  • The driving force (energy phase)
  • Acceleration / deceleration (power phase)
  • Zone ( combination of strength / power phase)
  • Balance Line

For understanding and analyzing these dimensions there have been established a number of indicators.

The Acceleration/Deceleration (AC) technical indicator measures the acceleration or deceleration of the current market driving force. The principle of operation of the AC indicator is based on the assumption of its creator Bill Williams that before the change of the direction of the price movement, the momentum of its change should fall.

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:

Awesome Oscillator (AO) is a momentum indicator reflecting the precise changes in the market driving force which helps to identify the trend’s strength up to the points of formation and reversal.

Fractals is an indicator highlighting the chart’s local heights and lows where the price movement had stopped and reversed. These reversal points are called respectively Highs and Lows.

The Gator Oscillator is a supplement to the Alligator indicator and is used alongside with it showing the absolute degree of convergence/divergence of the Alligator's three SMAs pointing at the Alligator's periods of slumber and awakeness (i.e. trending and non-trending market phases).

Market Facilitation Index is the indicator which evaluates the willingness of the market to move the price. The indicator's absolute values alone cannot provide any trading signals unlike it's dynamics in relation to the dynamics of the volume.