Alligator (Alligator or Bill Williams) is a trend indicator and signals the beginning of a new trend. It includes a series of moving averages, which use fractal geometry and nonlinear dynamics.
After reviewing all the features and understand the intricacies of this indicator can be a powerful tool for analyzing the forex market. A distinctive feature of this indicator is that it basically works on all timeframes, which makes it universal.
Graphically, Alligator Bill Williams has three moving averages with different parameters (5,8,13) and colors (red, blue, green).
Alligator shows the beginning of a new trend, when the moving averages start to diverge in different directions. If the lines are intertwined - that the market flat (sideways trend).
alligator indicator constructed by the following principles:
The calculation takes the average price average price ATL = (maximum + minimum spark plugs) / 2
Alligator's Jaw (blue line) = 13 priodnoe smoothed moving average, shifted by 8 candles.
Alligator's Teeth (red line) = 8-period Smoothed Moving Average, moved to 5 candles.
Alligator's Lips (green) = 5-period Smoothed Moving Average, moved to the left for 3 candles.
Thus Alligator indicator is a combination of three moving averages with different periods and razlinchnymi shift. Interweaving which forms the signal.
main signals from Alligator:
1. The strength of trend. Determined by the time the long moving averages are intertwined. The longer the time they are intertwined, the stronger the trend.
2. Preparing to enter the market. If the Frema flat amplitude begins to increase in prices and the distance between the moving averages are also increasing, it is prerequisite to the beginning of a new trend.
3. Entry into the market. Typically, the indicator Alligator isoplzuyut not in pure form for entering the market. Need confirmation in a fractal upward.
4. Refilling or adding to positions. Refilling takes place, provided that the situation remains the preceding rules and a new fractal higher than the previous.
5. Statement of the stop-loss. Statement of the stop-loss is determined by the level of risk, which itself took a trader and the money management that governs. Stop-loss orders can be placed at any line of moving averages. But keep in mind that setting stop-loss at the shortest five-period, is fraught with false breakdowns, and 13-period - the existence of large losses.
The basis of the Alligator put a lot of profitable trading systems and tactics.