Alligator indicator is a simple and effective tool that can help you in your forex trading. This indicator is composed of three lines which represents the jaw teeth and lips of the alligator. The alligator is a metaphor for a market that is eating up the smaller timeframe moves.
The alligator indicator can be used in two ways. The first way is to use it as a trend following tool. In this case you would want to trade in the direction of the alligator’s mouth. That is you would want to buy when the alligator’s jaw (blue line) is above the alligator’s teeth (red line) and you would want to sell when the alligator’s jaw is below the alligator’s teeth.
The second way to use the alligator indicator is as a mean reversion tool. In this case you would want to trade in the opposite direction of the alligator’s mouth. That is you would want to buy when the alligator’s jaw is below the alligator’s teeth and you would want to sell when the alligator’s jaw is above the alligator’s teeth.
In order to trade using the alligator indicator you will need to know how to set up your charting software. For this example we will be using the MetaTrader 4 charting software.
Once you have launched MetaTrader 4 go to File > Open Data Folder. This will open up your MetaTrader 4 data folder. Go to the MQL4 > Indicators folder. Copy and paste the alligator.ex4 file into this folder.
Next go to View > Navigator. In the Navigator window click on the Indicators tab. You should see the alligator indicator listed under the Custom Indicators section. Double-click on the alligator indicator to add it to your chart.
You will then need to specify the settings for the alligator indicator. The default settings are:
Period: 13
Shift: 8
Method: Smoothed
Application: Alligator
You can leave these settings as is or you can modify them to suit your own trading style.
Once you have applied the alligator indicator to your chart you will see the three lines that make up the alligator indicator. The alligator’s jaw is the blue line the alligator’s teeth is the red line and the alligator’s lips is the green line.
As mentioned earlier you can use the alligator indicator as a trend following tool or as a mean reversion tool.
If you are using the alligator indicator as a trend following tool you would want to buy when the alligator’s jaw is above the alligator’s teeth and you would want to sell when the alligator’s jaw is below the alligator’s teeth.
If you are using the alligator indicator as a mean reversion tool you would want to buy when the alligator’s jaw is below the alligator’s teeth and you would want to sell when the alligator’s jaw is above the alligator’s teeth.
In order to better visualize the alligator indicator you can add moving averages to your chart. For this example we will add a 20-period simple moving average (SMA) to our chart.
To add a moving average to your chart go to Insert > Indicators > Trend > Moving Average. In the Moving Average window select the following settings:
Period: 20
MA Method: Simple
Apply to: Close
Style: Blue line
Click OK to add the moving average to your chart.
You should now see the alligator indicator and the moving average on your chart.
The alligator indicator can be a helpful tool in your forex trading. Use it as a trend following tool or as a mean reversion tool or even better use it in combination with other technical indicators to help you make better trading decisions.
What is an alligator indicator?
An alligator indicator is a tool used by technical traders to measure market momentum.
How is market momentum measured with an alligator indicator?
Market momentum is measured with an alligator indicator by the relationship between the moving averages of price.
How are the moving averages of price calculated with an alligator indicator?
The moving averages of price are calculated with an alligator indicator by taking the average of a security’s price over a certain period of time.
What is the time period used to calculate the moving averages of price with an alligator indicator?
The time period used to calculate the moving averages of price with an alligator indicator is typically 5 8 and 13 periods.
How do traders use alligator indicator Moving Average Convergence Divergence (MACD)?
Traders use alligator indicator Moving Average Convergence Divergence (MACD) to crossover signals to confirm trends.
What are the default settings for the alligator indicator?
The default settings for the alligator indicator are 5 8 and 13 periods.
Can the alligator indicator be customized?
The alligator indicator can be customized by changing the time periods used to calculate the moving averages of price.
What is the alligator indicator used for?
The alligator indicator is used to measure market momentum and to confirm trends.
What are the advantages of using the alligator indicator?
The advantages of using the alligator indicator include its ability to measure market momentum and to confirm trends.
What are the disadvantages of using the alligator indicator?
The disadvantages of using the alligator indicator include its lagging nature and the fact that it is a secondary indicator.
How often do alligator indicator signals occur?
Alligator indicator signals typically occur every few days.
What is the alligator indicator’s accuracy?
The alligator indicator’s accuracy is limited by its lagging nature.
What are the alligator indicator’sfalse signals?
The alligator indicator’s false signals typically occur when the market is range-bound.
Is the alligator indicator useful in all market conditions?
The alligator indicator is most useful in trending markets.
How do I add the alligator indicator to my charts?
The alligator indicator can be added to charts by downloading it from a technical analysis website or by using a trading platform that offers it.
