No indicator forex trading strategy

While not a moving averageriding trends is strategy main quality. This article shows how to use Alligator indicator in Forex in a profitable trading way. Having a funny name, the indicator shows the power of bulls or bears to reverse a trend.

For forex reason, the indicator is popular among Forex traders, trend followers or contrarians. This is one of Bill Williams famous indicators. Together with Fractal, Strategy or the Awesome oscillator, the Alligator Forex strategy is unique in every way.

It is part of a special group of indicators. Trading platforms, MetaTrader included, offer the Bill Williams indicators separate from classical trend indicators or oscillators. All traders face a dilemma: However, one can use both.

Either as part of an individual trading system or not, the Alligator indicator shows the right side of the market. Traders use it to find a bullish or bearish market, support or resistance levels, confluence areas, etc. The indicator has a funny name: Part of it, there are three averages. A trading system based on moving averages plots multiple trading on a chart. Any Forex Alligator strategy contains three averages, with the above names. Any average has a period that relates to.

For the Alligator, these are the 13, 8 and 5 periods for jaws, teeth, and lips, respectively. All three averages combine the power of the Alligator indicator. One strategy choose the average type smoothed, trading, exponential, linear weighted and the price to apply it to. Either closing or opening price, a median one or not, multiple settings exist.

What makes this indicator unique is the ability to shift the averages. In fact, with the default settings, the averages shift, leaving a bit of room from current price until the Alligator Forex indicator.

We will use the MetaTrader trading platform to show how to apply it on a chart. However, any trading platform offers it, so the principle is the same. The result is a pop-up window like the one above giving you customized possibilities.

To use it like Bill Williams intended, just leave it with the default settings. Anything is editable, though: The three averages plotted on the chart reflect the time frame trading use. If the Williams Alligator indicator is set on the daily chart, the jaws consider 13 days, teeth 8 and lips 5, respectively. The jaws line comes in strategy, teeth in forex and lips in lime, but this is just a setting. For that, the following information is crucial.

When using indicator, think of a system that follows price. No matter where the price goes, the Alligator goes. These averages closely follow price and keep traders on the trend. Because of that, missing a trend is virtually impossible. The three elements should Forex cross.

When doing that, the perfect order forms. Moreover, this signals a strong trend. The bigger the time frame, the stronger the trend. What can go wrong? Firstly, price moves aggressively below the green line lips. This forex not scary if it is the first attempt. Strategy more the price tries, the weaker the trend becomes. In a bullish trend, it shows bulls lose steam. Also, they indicator become wannabe bears. Trading with Forex Alligator indicator gives two choices: Secondly, look for the perfect order to break.

This is a bearish sign in a bullish trend. In short, trading with the Alligator indicator is easy. Stay long when the price indicator above it, and short when is below. The perfect order is a plus. The perfect order is just one Alligator indicator strategy. It mainly deals with spotting the right trend.

And stick to it. However, Bill Williams designed it for other purposes too. Keep in mind that it shifts the averages further in time. This shifting allows for trading flexibility. In a way, it resembles the Ichimoku Cloud. That is, on the right side of the chart, obviously! Therefore, future support and resistance levels appear at present time. With the cloud, the price is in a trading of equilibrium.

It finds a balance between historical and future levels. Those shift backward and forward twenty-six periods. Hence, shifting is not a new concept. Bill Williams sensed its power and used it with the Alligator indicator. A wonderful Alligator indicator trading system deals with support and resistance levels. Moreover, levels are NOT horizontal. You see, traders make a fatal mistake. They believe support and resistance can only be horizontal. How about dynamic indicator As a rule of thumb, dynamic support and resistance move along with the price.

Therefore, they offer more value. The three lines that make the Alligator Forex indicator jaws, teeth, and lips do exactly that. They follow the price. If the price rises, the three lines follow. If the price falls, they fall too. The bigger the distance between the lines, the stronger the support and resistance area. The bigger the time frame, the more difficult for the price to break through. In this way, the area between the first line the green one — lips and the last strategy the blue one — jaws is dynamic support or indicator. For example, in a bullish trend, it shows support.

Note the Alligator indicator MT4 support on it. It starts from the green line and ends with the blue line. The lips offer weak support. If bears push stronger, they might reach the teeth. Jaws represent the final support. Trading is fun if a logical approach governs it. Decisions to buy or sell should come at support or resistance. For this reason, the Alligator indicator formula is a great tool for traders. In fact, they go hand in hand. First, one needs to look for a reversal pattern. This can be a double top or bottom, a head and shoulders pattern, or a triangle.

Or, it can be one of the Japanese candlestick techniques. The Japanese were masters in spotting reversals. As such, most of their techniques deal with trend reversal approaches. Use the Strategy indicator Forex platforms provide as confirmation. What is the confirmation then? This is very simple: The result is one of the trading approaches of how to use the Alligator indicator in Forex. Especially relevant is this system when used with a Japanese candlestick pattern technique.

Moreover, a morning star strategy, perhaps, the most powerful bullish reversal patterns ever! Confirmation protects a trading account. The Alligator Forex indicator is the perfect tool for that. Probably as important as the reversal pattern is its confirmation. Without it, traders end up going long, in this case, only to find out that market comes for their stop. Another great Alligator Forex trading system consists of interpreting the crosses.

That means, the crosses between the three lines that make the indicator. How about spotting the fake ones? A typical approach is to use the faster average the green line for spotting fake crosses.

Therefore, eyes on the green and red lines, please! When the green line crosses the red one forex then turns again without reaching the blue line, a fake move just forms.

Hence, in a bullish trend, go long on such a cross. Or, in a bearish trendgo short when the perfect order gets back in place. Keep things simple and logical and profits will come to you.

One example of a bearish cross in the chart above shows plenty of further downside potential. The fake cross was nothing but an opportunity to use the Alligator Forex platforms offer. And there are more of them. A similar fake cross is possible between the bigger averages: In fact, such a cross is more powerful. It is only normal, as the two lines consider more periods before plotting an actual value.

The time frame matters here too. Not for the actual cross, but for setting the right take-profit level. When a signal as described here appears, consider the time frame before setting the take-profit level.

Do that if the signal comes from the daily chart, for example. This way, you adjust your expectations with the time frame used. It calls for two big moving averages crossing. When the fast one moves above the slow one, a golden cross forms. When a death cross appears, forex opposite is true. Bears are in control. This Alligator indicator trading system offers a similar interpretation. The secret is to use the bigger averages in the same way. Therefore, use the red and blue lines as the faster and slower averages.

Just like in the case of a golden or death cross. A cross like this shows you the type of the market: Of course, in a bullish market, we want to buy. In a bearish market, shorting a Forex pair works best. Furthermore, use the green line of the Alligator indicator as a confirmation. If not, Think twice. The opposite is true when a death cross forms. One bearish and one bullish.

Both are great signals to take with the Forex Alligator indicator. Again, simple things work best in technical analysis. Just like indicator displaced moving average shifts on the right side of a chart, the Alligator indicator does that too. This is a powerful tool in the hands of Forex traders. Stop for a minute and think of how this indicator functions.

The lips, teeth, and jaws appear on a chart on the right side of the actual price. However, this is obvious only if you look at the current price. The currency pair is irrelevant. Before backtesting a strategy, take a look at the current price. That is the support level eight days from now! The same trading the other two lines: This is very important as traders forget this small detail. When backtesting, the entry signal is EARLIER than the respective candle.

Depending on the line that gives the signal, it is three, five or eight periods earlier. Such a small detail may or may not change the entry. However, it brings a whole new perspective to trading with any Alligator indicator strategy.

If your entry place considers forex Alligator, indicator must shift it earlier with the corresponding value. The same thing happens with displaced moving averages.

And now you have the wonderful opportunity to see the Alligator indicator in action. Below you will find a video example of the Forex Alligator in action. Bottom line, the trade generated pure profit of 1. This is how powerful the Alligator indicator could be. Confirming trending moves with the Alligator could put you in a trend that might exceed your expectation. The Alligator indicator shows a trending environment.

This is the main characteristic. However, one can use moving averages instead and have the same result. A indicator moving average has even the shifting attributes incorporated. Still, the Alligator indicator trading is unique in every way. It has multiple uses, not only one. And, it has one great advantage: This means traders cannot go wrong if respecting forex the Alligator Forex trading system.

Strategy trend-following strategies and reversal ones perform better when the Alligator indicator validates an entry. Furthermore, the indicator tells much about the strength of a support or resistance level. Again, the bigger the distance between the three lines, the stronger the dynamic support or resistance level is.

This is not the only indicator Bill Williams is famous for. There are plenty more. However, it has a big advantage: When an indicator repaints, its values change together with future prices. For example, the Fractals indicator disappears from the screen when price invalidates it.

The few trading strategies listed here meant to show the flexibility of the Alligator indicator formula. One can edit it or keep it as is, the outcome is the same: To sum up, this article shows how indicator use the Alligator indicator in the best possible ways. Probably the most powerful tool ever developed by Bill Williams, the Alligator indicator offers great value.

Damyan is a fresh MSc International Management from the International University of Monaco. During his bachelor and master trading, Damyan has been working in the area of financial markets as a Market Analyst and Forex Writer.

He is the author of thousands of educational and analytical articles for traders. When being in bachelor school, he represented his university in the Strategy Forex Trading Competition for students in Bulgaria strategy got the first place among other traders. He was awarded a cup and a certificate at an official ceremony in his university.

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Please remember that past performance results are not necessarily indicative of future results. The information on this site may be accessed worldwide however it is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Forum Pricing Features login sign up. Home Our Blog How to Use Alligator Indicator in Forex Strategies How to Use Alligator Indicator in Forex Strategies Damyan Diamandiev May 20, No comments.

Introducing the Alligator Indicator The indicator has a funny name: Applying the Alligator on a Chart We will use indicator MetaTrader trading platform to show how to apply it on a chart.

Alligator Indicator Standard Interpretation When using forex, think of a system that follows price. How to Use Alligator Indicator in Forex The perfect order is just one Alligator indicator strategy.

Dynamic Support and Resistance with the Alligator Indicator A wonderful Alligator indicator trading system deals with support and resistance levels. Look for Fake Crosses Another great Alligator Forex trading system consists of interpreting the crosses. Make the Most of the Shifting Attributes Just like a displaced moving average shifts on the right side of a chart, the Alligator indicator does that too.

Forex Alligator Indicator Trading Example And forex you have the wonderful opportunity to see the Alligator indicator in action.

What are you waiting for? Damyan Diamandiev Damyan is a fresh MSc International Management from the International University of Monaco. Best Moving Average Strategies for Day Trading in Forex April 28, by Damyan Diamandiev in displaced moving averageexponential moving averageForex indicatorsMoving AverageSimple Moving Averagesuper smootherTechnical Analysisvolume weighted moving average. Forex Trading for Beginners 3 Course: MQL4 for Complete Beginners 45 Course: Strategy Tester for Beginners 8 Forex 50 Forex Stategy 12 Forex Strategy 36 Forex Trading for Beginners 41 Forex VPS 1 Fundamental Analysis 1 Interviews 1 MQL4 2 Uncategorized A Guide to Forex Triangle Chart Pattern Trading June 28, Tips Every Forex Trend Trader Should Know June 21, Learn the Top-5 Forex Trading Techniques.

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