Strategy Using Alligator Indicators

Alligators are indicators that determine trends based on time periods. The main goal is where the price will move and how strong the movement will be.

To use the indicator we can imagine a large crocodile because the alligator is a crocodile.

What is the use of this indicator in trading?

  • Determine trends.
  • Determine the entry point.

The main function of the Alligator is to determine what trends are dominating the market whether it is rising (buying) or down (selling), which means that indicators can be used for trending periods on the market.

How does it work?
How to use it is simple - indicators represent a combination of three Moving Average that show various periods of time and movement. Keep in mind that the Moving Average is smooth and not simple or other types: it minimizes the effect of market noise and minor market fluctuations on the chart.

Bill William calls this Moving Average a Balance Line, because it shows the price that will occur in the market when there are no other factors that hinder.

Each Moving Average that is used in the Aligator has its own name:

  • Alligator's Jaw (jaw) - Purple line
  • Alligator's Teeth (Teeth) - A yellow line
  • Alligator’s Lips (Lips) - Blue line
  1. Alligator Strategy

Apply the Alligator indicator on the chart. You will see 3 lines of the "jaws" of the Alligator.
The movement when the indicator line is close indicates that the Alligator is sleeping. The longer he slept, the more hungry he became. This is a waiting period and if you are dealing with something like this then it is not recommended to do trading activities.
When the Alligator wakes up it starts to "evaporate", then opens the "jaw". This is a good time to enter the market. .

Opening the jaw up is a signal of further upward movement and buying call options.
Opening the jaw down is a signal of further downward movement and buying the put option.
After eating enough, the Alligator begins to lose appetite for "food" and the indicator lines are back together. This shows the signal to end trading and wait for the next signal to return.
Advanced use

Important notice: Like other methods or technical analysis, the Alligator indicator may show a delayed signal. Incorrect signals may also appear; therefore alligators require maximum optimization, in accordance with certain market conditions and certain assets.

After selecting the Alligator indicator, you will see a settings page.

By increasing the number of periods, the Alligator is optimized for a more volatile market. The indicator will show less, but a more accurate signal.
By reducing the number of periods, the Alligator is optimized for trending markets. The indicator will give more signals, but the accuracy will depend on the strength of the trend.
The most used Alligator settings:
Markets with erratic fast-moving assets: (for example when important news releases on the market)