Forex

Williams Alligator Indicator is one of the most accurate indicators used by traders to find the trend.

In this article, I will discuss Alligator Indicator, Williams Alligator, Bill Williams three lines  & more

This indicator was developed by one of the greatest names of all time Bill Williams.

Bill Williams has done a lot for traders like us. He dedicated all his life in simplifying the trading system.

His family is still trading in the stock market and donating 50% of their earnings to charitable projects.

According to Bill, The market acts just like an alligator who sleeps 80 – 85% of the time and is only active 15 – 20% of the day.

Similarly, The market is also active only 15 -20% of the day and the rest 80 – 85%. the market is sleeping.

The alligator indicator uses three smoothed moving average lines named Jaw, teeth, & lips of an alligator.

Lips: It is a 5 period smoothed moving average, moved by 3 bars into the future.

Teeth: It is an 8 period smoothed moving average, moved by 5 bars into the future.

Jaw: It is a 13 period smoothed moving average, moved by 8 bars into the future.

In this article, I will also cover Alligator Indicator Strategy, Lips line, Alligator teeth & more

 

William Alligator Formulla:

SUM 1 = SUM (CLOSE,N)

SMMA1 = SUM1 / N

Subsequent values:

PREVSUM = SMMA (i – 1) * N

SMMA (i) = (PREVSUM – SMMA (i -1)  + CLOSE (i) / N

Where,

N is the smoothing period

SUM1 signifies a sum of price closes during the period N.

SMMA1 is a first bar smoothed moving average.

PREVSUM means smoothed sum of the previous bar.

SMMA (i) is a current bar smoothed moving average.

CLOSE (i) represents the current price close.

Now, I understand this formula is really complex. However, the good news is that you need to remember this formula and trading with this indicator is very easy.

 

Setting up in Binomo:

Here, to illustrate Williams Alligator Strategy. I am going to use Binomo.

In case you don’t have a Binomo account. Click here.

Once you signed up you will land on the Binomo dashboard. Now, click on the chart button & select candle from the menu.

Secondly, click on the indicator button and select alligator from the menu.

Thirdly, change the colour of the indicator.

 

That’s it!! The basic setup is over.

 

How to read the indicator?

 

The first line is called the Jaw which is also the slowest line.

The second line is teeth while the third line is lips which is the fastest.

As I said earlier, that the alligator sleeps 70-80% of the time, However, When the three cross each other then the market or alligator has awakened.

Trading with Alligator Indicator:

Trading with Alligator Indicator is very easy. You just need to remember the golden rule.

The golden rule of the Alligator strategy says:

If the three lines intersect near the support level plus the green is above all. it indicates a good uptrend. So, here we should take a Buy trade.

Similarly, If the three lines intersect near the resistance level plus the green is below all. it indicates a good downtrend trend. So, here we should take a Sell trade.

Let’s check a few examples:

Given above is a 1- hour chart and we can clearly see that the three lines intersect with each other near the resistance level plus the green is below all. it indicates a good downtrend trend. So, here we should take a Sell trade.

Similarly, Given above is a 1-hour chart and we can clearly see that the three lines intersect near the support level plus the green is above all. it indicates a good uptrend. So, here we should take a Buy trade.

Conclusion:

Williams Alligator Indicator is one of the most accurate trading indicators you can ever use for detecting the possible buy and sell calls.

This Indicator was developed by one of the most popular names in the field of trading Bill Williams.

Bill has done a lot for our trading community by simplifying the trading system.

According, to Bill, The market is only active 15 – 25% of the time and the rest 75 – 85% of the time the market is inactive.

This trading indicator is divided into three lines namely Jaw, teeth, & lips.

When these three lines intersect with each other near the support level it indicates a Buy trade and similarly a sell trade near the resistance level.

In this article, I have covered Alligator Indicator, Williams Alligator, Bill Williams three lines, Alligator Indicator Strategy, Lips line, Alligator teeth & more.