Learn about the alligator trading strategy and how to use it with price action in this in-depth video. The alligator indicator consists of three lines which represent the alligator’s mouth, and is one of the simplest and most accessible trend indicators. Traders can determine the lack of a trend, the formation of a trend, and its direction, with the alligator trading strategy, as well as other indicators such as awesome oscillator and fractals. It is easy to install and use on any trading platform, and can be applied to forex, stock, and cryptocurrency trading, as price action stays relatively consistent across different assets.

Alligator Trading Strategy: How to Use it with Price Action

Introduction

The Alligator Trading Strategy is a well-known strategy created by Bill Williams. It is a trend indicator that determines the market trend with the help of three smooth moving averages. In this article, we will go through this strategy in depth and how it can be used in combination with price action. Whether you are new to trading or an experienced trader, this strategy is simple and easy to use, and can be applied in any market.

Why the Alligator Indicator Matters

The alligator indicator is easy to remember and provides clear signals that can be easily identified by traders. The three lines of the alligator represent the different stages of an alligator’s daily routine: sleeping, hunting, and eating. The alligator sleeps when there is no trend, hunts when there is a period of trend formation, and eats when there is a strong trend. The indicator makes it easy for traders to determine the lack of a trend, a period of trend formation, and its direction.

How the Alligator Pattern Works

The indicator consists of three lines, which are smooth moving averages. The blue line is the slowest moving average, representing the alligator’s jaw. The red line is the intermediate moving average, representing the alligator’s teeth. The green line is the fastest moving average, representing the alligator’s lips. When the lines are intertwined, it indicates a lack of trend. When the green line crosses the other two lines, it signals a trend formation. The strength of the trend depends on the length of the sideways movement.

Basic Principles of the Alligator Trading Strategy

To start trading with the alligator trading strategy, the trader needs to install three indicators: the alligator indicator, the awesome oscillator, and the fractals indicator. The alligator indicator determines the trend, the awesome oscillator helps to identify the current trend and possible reversals, and the fractals indicator shows the local highs and lows.

When the three lines of the alligator are intertwined, it indicates a lack of trend, and the awesome oscillator is near zero. When the lines start to diverge in one direction, it signals a possible beginning of a new trend. The entry signal is confirmed by a breakaway of the nearest fractal on the chart. For a signal to buy, the intertwined lines of the alligator must start going upwards and diverge. The awesome oscillator histogram must start growing from zero, and its color must be green. The stop loss should be placed behind the level of the nearest opposite fractal lying below the alligator lines. The main landmark for taking profit is the red line of the alligator.

For a signal to sell, the intertwined lines of the alligator must start going downwards and diverge. The awesome oscillator histogram must start falling from zero, and its color must be red. The stop loss should be placed behind the level of the nearest opposite fractal lying above the alligator lines. The main landmark for taking profit is the red line of the alligator.

Conclusion

The alligator trading strategy is a simple and easy-to-use strategy that can be applied to any market. It is a trend indicator that determines the market trend with the help of three smooth moving averages. It is important to remember that the alligator indicator works best when combined with price action. By following the basic principles of the alligator trading strategy and incorporating price action, traders can increase their chances of making profitable trades.