The Alligator indicator by Bill Williams forex strategy is a trend seeking forex strategy that is built around the Bill Williams indicator (Alligator indicator) and the Awesome oscillator, another Bill Williams indicator.
This strategy is essentially all about Bill Williams.
Chart Setup
MetaTrader4 Indicators: Awesome.ex4 (default setting), Alligator.ex4 (default setting)
Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day
Recommended Trading Sessions: Any
Currency Pairs: Any pair
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Buy Trade Example
Fig. 1.0
Strategy
Long Entry Rules
Enter a buy in the market if the following indicator or chart pattern are on display:
- If the lime colored line of the Alligator MT4 indicator crosses both the red and the blue line upwards, it is a signal to go long i.e. enter a buy position for the currency pair of interest.
- If the Awesome indicator forms histograms above the 0.00 level, then we can say that price is bullish. The bullish trend is said to be strong when the color of the histogram is green and the bulls market is weak when the color of the histogram is red.
Stop Loss for Buy Entry: Place stop loss below the blue Alligator SMA line or support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit on bullish position(s) if the following holds true:
- If price breaks below the lime colored line of the Alligator MT4 indicator as shown on Fig.1.0, it is a trigger to exit or take profit.
- If the histograms of the Awesome indicator fades downwards into the 0.00, eventually forming below the 0.00 mark, then we can exit or take profit accordingly.
Sell Entry Rules
Enter a sell in the market if the following indicator or chart patterns are in display:
- If the lime colored line of the Alligator MT4 indicator crosses both the red and the blue line downwards, it is a trigger to go short i.e. enter a sell position for the currency pair of interest.
- If the Awesome indicator forms histograms below the 0.00 level, then it translates into price being bearish. The bearish trend is said to be strong when the color of the histogram below the 0.00 level is red and the bears market is weak when the color of the histogram turns green.
Stop Loss for Sell Entry: Place stop loss above the blue Alligator SMA line or resistance.
Exit Strategy/Take Profit for Sell Entry:
Exit or take profit on position(s) if the following holds true:
- If price breaks above the lime colored line of the Alligator MT4 indicator as shown on Fig.1.1, it is a trigger to exit or take profit.
- If the histograms of the Awesome indicator fades upwards into the 0.00, eventually forming above the 0.00 mark, then it is a trigger to exit or take profit.
Fig. 1.1
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About The Trading Indicators
The Alligator indicator by Bill Williams is made up of three components; a 13-day Simple Moving Average with an 8 as its shift setting (blue color), a 13-day Simple Moving Average with a 5 as its shift setting (red color) and a 5-day Simple Moving Average with a 3 as its shift setting (green color).
The Awesome oscillator is another technical study from Bill Williams that is used to spot trends or to expect likely reversals.
The Simple Moving Averages that are used in the computation of the Awesome indicator use their bar’s midpoints, instead of the closing prices.