Bill Williams 3 Lines

smoothed moving averages

You can see in this graphic the 3 lines mixed together. When this occurs, section of the previous high and low and using your entry tactics, trade inside the range. As the green line continues in one direction, the red line which represents the teeth of the Alligator, begins to separate and move in the same direction – the teeth are opening. If using a trading platform such as Tradingview, you will have access to the complete indicator. In our review, we will use the Alligator to point us in the right direction, before entering the trade with a two-bar reversal. The main idea of this Forex indicator is to send a signal when a trend has just started.


An « sated » sell signal arrives when the Lips cross below the Teeth and Jawlines and lines intertwine as the price moves sideways. Williams believed that individuals and institutions tend to collect most of their profits during strongly trending periods. You may be figuring out how to choose the right moment to leave the market with the maximum profit using the Alligator. You should use best any system based on the use of Trailing Stop orders. For example, you can focus on the Teeth line, which is an 8-period smoothed MA shifted by 5 bars to the future. You can also use the Parabolic SAR indicator, which draws the points above or below the price in dependence to the current trend.

What Is Basis Trading? Profit by Arbitraging… averages are highly popular among forex traders, mostly because of their… Having said all that, it is important to remember that the dynamics of the market are always changing and a trader should use stop-losses and take-profit orders to avoid losing capital. There is no guarantee that the price will go up indefinitely if the green line is above the red and blue line and vice versa. A perfect uptrend is when the green line trades above the red and blue lines. A perfect downtrend is when the blue line trades above the red and green lines. Fans of the Tradingsim blog know that I am big on volume.

gator oscillator

The “Alligator Jaw” shows us the prices that will be set on the market if some new factors do not affect them. If the price is above this line, the market will not only move up but also positively evaluate new factors. Consequently, if the price is below the “jaw”, the market will go down and take the new factors negatively. The green line (Alligator’s Lips) is the Balance Line for a significant period, which is lower by another order (the 5-period smoothed Moving Average shifted by 3 bars to the future). Pay attention that crossing the Alligator’s lines is the first signal of the upcoming move in one direction or another.

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Get ready for a surprise – in this article we are going to discuss Jaws, Teeth, Lips, and everything Alligator! Once upon a time, there was a legendary trader known as Bill Williams. His vast experience led him to develop multiple tools for technical analysis including the trend following indicator we are talking about now.

The calculation is made by subtracting averages over these timeframes. The Simple Moving Averages are formed not at a closing price but midpoints of each candlestick. Alligator isn’t the only indicator created by Bill Williams. Nonetheless, it’s famous among forex traders all around the world. The popularity is based on simplicity and accessibility.

How to trade with Alligator Indicator

If the sell fractal is above the teeth, then you ignore it. If the sell fractal is below the teeth, then you place a pending order just below it. When it comes to the speed we execute your trades, no expense is spared.

williams fractals alligator

Let’s explore the alligator indicator and see how it’s used to identify trends in forex trading. The three lines stretched apart and moving higher or lower denote trending periods in which long or short positions should be maintained and managed. It should be noted that the Bill Williams Fractal Indicator is part of a larger trading system that he built. He uses the Alligator Indicator that he also designed in order to trade this market. The Alligator indicator features three moving averages of their smoothed out but is essentially a simple triple moving average system.

Profitable Trading Strategy with Alligator Indicator

The reduction in noise from the traditional Williams %R is significant. Williams %R , also known as the Williams Percent Range, is a type of momentum indicator that… The MTF is calculated by first running the Relative Strength Index on the Awesome Oscillator and then applying an Exponential Moving Average on the… You can change this to simple, linear weighted, and exponential. In simple, these shifts are the periods are moved into.

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Another simple strategy of using the Williams Alligator is in trend following. For starters, this is a simple strategy that aims to buy a financial asset that is rising and short one that is falling. As shown below, the EUR/USD pair reversed its descent when the three periods reversed. A buy signal usually comes when three lines reverses and the jaw remains on the right sides. As the price rises, you should watch as it moves below the green line.

Parameters and control

PrimeXBT shall not be responsible for withholding, collecting, reporting, paying, settling and/or remitting any taxes which may arise from Your participation in the trading with margin. PrimeXBT Trading Services LLC is incorporated in St. Vincent and the Grenadines as an operating subsidiary within the PrimeXBT group of companies. PrimeXBT Trading Services LLC is not required to hold any financial services license or authorization in St. Vincent and the Grenadines to offer its products and services. If D1 is in an uptrend, then you need to wait for the downtrend on H4 . If D1 is in a downtrend, then you would wait for the uptrend on H4.

  • Its direction will show the appeared fractal, when the candle closes completely above all three moving average indicators.
  • In the event they move down, with the green being less than the red being less than blue, then you’ll be looking into the possibility of selling since it indicates a downtrend.
  • It is a sell signal in the Alligator trading strategy.
  • I use yahoo fiancé and i try to figure out stuff, and some i follow, but the alligator i couldn’t figure out, so i deleted it.

I can only say this shows how random the « stanard tools » are and how the market makers « play » these kind of tools to their advantage. It’s better tha average, but not top-class, so expect to have to take signals with other confluence. Similarly, a bearish trend will remain if it is on the right side of the chart. As such, you should start exiting when the price moves towards the lips of the indicator.

The Williams Alligator technical analysis indicator can be used to discover the absence of a trend, trends that are beginning to form, and when markets have begun to trend. Traders can utilize this information to make decisions on when to enter or exit the market. Your challenge is to keep company with this animal and hunt with it; otherwise, you yourself risk being eaten. When all three lines are aligned, going up one after another with the green being greater than red being greater than blue, prices are in an uptrend. In the event they move down, with the green being less than the red being less than blue, then you’ll be looking into the possibility of selling since it indicates a downtrend. If moving averages are entwined, then it is best to be out of the market .