Konstantin Boykachev

CEO Proforexea LLC

Honest Coder

Professional Trader

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Konstantin Boykachev

CEO Proforexea LLC

Honest Coder

Professional Trader

Blog Post

Alligator Simple – learning indicator anatomy

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alligator indicator

In the middle of the last century, Bill Williams became one of the most “prolific” authors of technical analysis indicators. Its “wonderful” oscillator is included in many strategies. The Alligator indicator is another of its innovations, on which the Alligator Simple Expert Advisor is built, provided free of charge by the broker AMarkets.

Learning to work with the Alligator indicator

The Alligator indicator refers to combined instruments that methodically give the trader signals with a certain combination of basic indicators. Positions are opened relatively infrequently, but they are accurate. There are almost no double interpretations that lead to the appearance of false signals. Alligator is based on 3 moving averages, and the formula is a combination of Balance Lines calculated on the basis of fractal geometry and nonlinear dynamics.

Components Alligator (in basic colors):

  • blue (Jaw) – MA, on the basis of which the main chart is built. Period of the smoothed moving average – 13 with a shift by 8 candles to the future;
  • red (Teeth) – MA with a shorter period (Period = 8, shift = 5);
  • green (Lips) – MA with a period of 5 and a shift by 3 candles into the future.

All three moving averages show the interaction of traders at different time periods. The indicator reads as follows:

  • when all lines are intertwined (converge at one point), the market is flat;
  • as soon as the lines begin to diverge after a flat, this indicates the inception of a trend. If the blue line remains higher, the red and green ones go down – the trend is strong, downtrend. In an upward price chart, the blue line is at the bottom;
  • the longer the Alligator MAs intersect with each other and have a horizontal parallel direction, the longer the trend will be.

How the Alligator works

The disadvantage of the Alligator indicator is lagging signals. Therefore, in manual strategies, it is supported by the analysis of fractals (a sequence of 5 candles with a pronounced maximum) or some kind of oscillator. The field for experimentation is large, but you shouldn’t combine the Alligator with another trend indicator.

The Alligator Simple EA opens a long position when the green line is above the red, the red is above the blue. The reverse sequence opens a short position.

Advisor settings:

  • Trall – enable trawl;
  • Chel, Teeth, Lips – 6 parameters responsible for the period and shift of the sliding (Jaws, Teeth and Lips);
  • MAmethod – MA method for calculating the indicator (0 – simple moving averages, 1 – exponential moving averages, 2 – SMMA, 3 – LWMA);
  • MAprice – price for calculating the Alligator Moving Formula (7 variations).

The efficiency of the advisor is about 45% in 6 months with a drawdown of 22.13%. Recommended deposit – from 2000 dollars. USA. The Expert Advisor can be used as an additional long-term strategy on any currency pairs, but it is better to turn it off at the time of news release. Although at this moment the exit from the flat is obvious, there is a possibility of receiving false signals due to volatility.

The Alligator indicator is considered one of the very accurate advisors, but with a caveat: you need confirmation signals and you need to work on a long timeframe. An Expert Advisor based on it has been known since 2011 and has hardly been modified since that time (evidence that it works in different markets). The code is open, so those who wish can supplement it and share their improvements and opinions in the comments.

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