Operational application of the Williams Alligator Indicator

What Is the Williams Alligator Indicator?
The Alligator indicator, the English name Alligator, was invented by Bill Williams. It is composed of three smooth-moving average lines (SMMA) of different colors. When the three lines are entangled, it indicates that the market is relatively stable; when the three lines are separated, it indicates that the market may be active and a new round of The trend is about to start.

Alligator Line Indicator Introduction
Gator Jaw – Alligator Jaw (blue line)
Gator Teeth — Alligator Teeth (red line)
Gator Lips – alligator lips (green line)
The Alligator is calculated using the smoothed moving average and the market average price and moving period. The details are as follows, the calculation method does not need to be mastered by Hui friends, this indicator can be found in basically all MT4 tools.
Average Price = (Highest + Lowest) / 2
Alligator’s Jaw = SMMA (average, 13, 8)
Alligator’s Teeth = SMMA (Average, 8, 5)
Alligator’s upper lip = SMMA (average, 5, 3)
To use, plug directly into the technical indicators, select Bill Williams, then Alligator. It is recommended to use a larger time period, such as a 4-hour chart and a daily chart.

The default parameters, the blue line jaw is a 13 period moving average, the red line teeth is an 8 period moving average, and the green line lips are a 5 period moving average. The parameters do not need to be changed during use.
Application of the Alligator indicator
The Alligator indicator can be used to judge whether the market is operable and give us the general direction. At the same time, it also has the nature of moving average, which can provide buying and selling signals.
When the three lines are entangled together, it seems that the crocodile is sleeping, the market is relatively stable, and the market is generally volatile. When the distance of the 3 lines gradually increases, it means that the crocodile wakes up to hunt, that is, to hunt down price fluctuations, indicating that a new market trend is about to begin.

The positional relationship of the 3 lines can give buy and sell signals. When the moving averages are green-red-blue from top to bottom, that is, the throat (jaw) of the crocodile is at the bottom, and then the teeth and lips are next to it, which means that the crocodile is about to prey, and the distance between the moving averages increases. When the market is trending up, it is a buy signal. The moving averages are arranged in the opposite direction, blue-red-green from top to bottom, indicating that the crocodile is full and shut up, which means a downward trend and a signal to sell.

Remember that the alligator’s mouth is above the 3 lines, we will not go short, and the alligator’s mouth is below the 3 lines, and we will not go long.
When the price is above the alligator’s mouth, we will only buy, and when the price is below the alligator’s mouth, we will only sell.

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