quick scalping by using Alligator indicator | forex

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Using the Alligator Indicator in Your Day Trading



As the name implies, the Alligator indicator is a signal strengthening that uses a smooth indicator of the Moving average. Founded by Bill Williams, this Alligator indicator uses three MA lines which can indicate bearish or bullish signals from the forex market.

Therefore, this alligator indicator is popular among Forex traders, either by following the trend or against the trend. Together with Fractal, Gator or Cool oscillator, the Alligator strategy is known to be unique in every way. This alligator indicator is an indicator in a special indicator group. The trading platforms, including MetaTrader, offer the Bill Williams indicator apart from the classic trend indicators or oscillators.

 

The Formula Inside the Alligator Indicator

In the Alligator indicator, what traders need to know about its use is to use a set of ratMoving averages with various parameters. The average price required for the calculation is defined by the terms; PriceMedian = (PriceHigh + PriceLow) / 2.

 

The calculation starts with a simple moving average value, and is then calculated using the formula:

 

(SMMAi) = (SUM(1) – (SMMAi-1) + PriceMedian(i)) / N,

Where the explanation of the formula above is as follows below:

SMMA (i) – current price (without the first price);

SUM(1) – the sum of the PriceMedian in N periods (since the previous bar);

(SMMAi-1) – the current price value from the previous previous price;

PriceMedian (i) – average price on the current bar.

The Alligator indicator settings in the meta trader for each timeframe you use are as follows:


 

Green MA = is the lip of the Alligator and is set to parameter 5 and moved to the next parameter (future period) for 3 periods

The red MA represents the teeth of the Alligator and the parameters used are set to period 8 and period 5 onwards

The blue MA represents the jaws of the Alligator and is set to period 13 and period 8 onwards.

 

As shown in the following chart.

How this Alligator indicator works

The main points of reference for this indicator are when the lines intertwine, when they “open”, and when the red and green lines cross each other. When connected, the Alligator indicator is said to be sleeping. At this time traders are expected to be patient, because this is a strong signal or the market is in a sideways stage. When the lines start to separate, the Alligator is at the feeding stage. Stay in the trading position when the candlestick rises above or below the Alligator's line. When the lines meet or cross, it is time to consider buying or selling OP positions.

As with any technical indicator, this Alligator indicator can never be 100% correct. False signals can occur when the market is going on, but the positive signals this indicator gives are consistent enough to give each trader an “advantage”. Trader's skills in interpreting and understanding Alligator signals must be developed and take enough time to be strong enough to understand them, and complementing the Alligator tool with other indicators or patterns of pricing behavior is always advised to wait for further confirming signals of a potential trend change.

When using this Alligator indicator, also think of a system that will always follow the price. Wherever the price moves, this indicator will follow it. This trend follows the nearest price and keeps the trader on the trend. Because if we lose the trend, most likely it will not happend

The classic way to use the Alligator indicator is to look for “Orders that are right on target”. We as a trend know the old saying: “the trend is your friend”. So we will all understand that when the trend occurs, don't fight it but it's better to follow it, so that we won't be trapped in that trading position.

In short, trading using the Alligator indicator is very easy. You should stick to this parameter in your trading especially if the price hints at increasing momentum. The best time to enter into an uptrend is just before it occurs. 

Although you may not be able to get the exact price when the trend starts; be it when you want to be bullish or bearish, enter the OP as close as possible to the current price so that your trading is achieved to the maximum.