A typical trend-following strategy composed of an 144 period simple moving average along with the Alligator indicator.
We’re looking to buy or sell currencies into an established trend.
Chart Setup
Indicators: 144 period simple moving average (144 SMA), Alligator (default settings)
Preferred time frame(s): 15 min and above
Trading sessions: Any
Preferred Currency pairs: Any
Download
Download the Forex Strategy With Alligator Indicator for Metatrader 4.
GBP/USD 1 Hour Chart
The GBP/USD chart illustrates 3 buy signals into an established up trend. Click the chart to enlarge.
Trading Rules
Buy Rules:
- Criteria #1: Price above the 144 period SMA (established bull trend)
- Criteria #2: Alligator green line crosses back above the red and blue line from below
- Criteria #3: Alligator red line crosses back above the blue line from below
Buy the pair.
Stop-Loss: SL Method 1: Place your stop-loss 1 pip below the rising 144 SMA and trail your stop up 1 pip below the 144 SMA. SL Method 2: Place stop below the most recent swing low point in the up trend.
Target: TP Method 1: Risk-to-reward 1.5 or better. TP Method 2: Close the trade when the green Alligator line crosses back below the red line (short-term bearish signal).
Sell Rules:
- Criteria #1: Price below the 144 period SMA (established bear trend)
- Criteria #2: Alligator green line crosses below the red and blue line from above
- Criteria #3: Alligator red line crosses back below the blue line from above
Sell the currency pair.
Stop-Loss: SL Method 1: Place your stop-loss 1 pip above the declining 144 SMA and trail your stop down 1 pip above the 144 SMA. SL Method 2: Place stop above the most recent swing high point in the downtrend.
Target: TP Method 1: Risk-to-reward 1.5 or better. TP Method 2: Close the trade when the green Alligator line crosses back above the red line (short-term bullish signal).