Alligator Indicator

Alligator Indicator

Alligator is one of the best alternatives for moving average indicators. Highly sensitive to price movements. Offers classic crossover signals on MT5 charts

Categories: Trend, Signal, MT5

The Alligator indicator portrays a super trend trading strategy that determines classic buy/sell signals for forex and stocks day traders.

This indicator comprises three smoothed moving averages that intersect each other to plot crossover signals during trend-reversal moments.

In day trading, the market trend direction becomes highly unpredictable, especially during highly volatile markets. Besides, the price intends to reverse more in shorter timeframes. However, not all the reversal attempts end up with a successful bullish/bearish trip. So, it is crucial to spot a trend-following movement carrying a higher probability of hitting your target.

In terms of signal accuracy, the Alligator is a good competitor of exponential and linear weighted moving averages. However, this indicator may lag a little to confirm a trend-reversal during highly volatile markets.

How to do profitable forex day trading in MT5 by using the Alligator indicator?
The three moving average lines of the Alligator are named “Lips,” “Teeth,” and “Jaws.” The Lips and Teeth represent a five and an 8-period MA. The Jaws represent the 13-period MA which works as an ultimate trendline support/resistance of the price.

The bullish and bearish trend signals directly depend on the orders of the trendline positions. For instance, Lips climbs at the top, Teeth stays in the middle, and Jaws drop to the bottom means the Alligator has just opened its mouth. It reflects a hungry beast with an open mouth. Technically, it implies a bullish crossover signal that indicates an uptrend market is imminent.

During a downtrend move, the Lips take the lowest position, the Teeth remains at the middle, and the Jaws move to the top. It means the Alligator has closed its mouth, signaling a solid bearish trend market.

For buy orders, you may either exit the entry at your preferred target zone or wait until the Alligator closes its mouth. Conversely, close a short trade when the Alligator’s mouth gets opened.

If you love to keep your targets open, you may try applying trailing stops. Since the Jaws (13-period MA) works as a dynamic trendline, we can use its level to determine the trailing stop position of the active orders.

The Alligator also indicates the strength/weakness of the market trends. For instance, the lines expand when the current price trend gets more robust. On the other hand, a squeezing pattern of Alligator lines signals for an upcoming sidelined market.

Conclusion
The Alligator indicator assists traders in holding the correct position for more extended periods. Eventually, its trading strategy increases your chances of earning a more significant profit margin compared to risks. Besides crossovers, the Alligator’s jaws, teeth, and lips also identify potential support/resistance zones and trailing stop levels of active orders. According to our review, the Alligator is an ideal indicator for beginner-level day traders.