Alligator

Alligator Indicator Mt4
The Alligator indicator is a super trend trading strategy that generates buy/sell signals for day traders in stocks and forex.

The indicator consists of three smoothed moving averages that cross each other in order to show a crossover signal in the event of a trend reversal.

Day trading can make market direction unpredictable, especially in volatile markets. Prices can also reverse within a relatively short time frame. Not all reversal attempts will result in a successful bullish/bearish journey. It is important to identify a trend following movement that has a better chance of reaching its target.

In terms of signal accuracy, the ‘Alligator’ can compete with the indices and linear weighted moving averages. This indicator can sometimes lag slightly in volatile markets to confirm a trend reversal.

Profitable forex day trading in MT4 using the Alligator indicator
alligator indicator mt4

The three moving averages of the Alligator indicator are known as the Lips, Teeth and Jaws. The Lips and Teeth represent the 5-period MA and the 8. The Jaws are the 13-period MA and act as the ultimate trendline support/resistance for price.

The order of the trendline positions directly affects the bullish and bearish signals. The lips rise at the top, the teeth stay in the middle and the jaws drop to the bottom, which means the crocodile has just opened its mouth. This is a sign of a hungry beast opening its mouth. This is a bullish crossover signal, indicating that an uptrending market will soon be visible.

In a downtrend, the lips are at the bottom while the teeth remain in the middle and the jaws rise to the top. This indicates a strong bearish trending market.

You have two options for buying orders: exit at your target zone, or wait for the crocodile’s mouth to close. You can also close a short trade when the crocodile opens its mouth.

If you prefer to keep your target, you may consider a trailing stop. We can use the Jaws (13-period MA) as a dynamic trend line to determine the location of trailing stops for active orders.

The strength of a market trend can also be indicated by a crocodile line. If the current price trend becomes stronger, these lines will expand. On the other hand, the squeeze pattern of the alligator lines signals that the market will be put on hold.