Of course, there is a traditional delay on the histogram, and therefore Gator Oscillator is not recommended as the main element of the trading strategy. Green bar − current value is higher than the previous one. Because of the unconventional interpretation, this oscillator can cause misunderstanding among beginners, but the benefit from its application becomes more obvious with some trading experience.
During the flat periods indicator constantly changes its signals − in such conditions an inexperienced trader can perform a series of the unprofitable trades. The oscillator displays the difference between what works on wall street deutsch the Alligator red and blue lines and that between red and green lines . As mentioned earlier, when you see the eating phase, you let your trades run, as there is a strong chance of trend continuation.
Pivot points are an excellent leading indicator in technical analysis. When both bars above and below the centerline are red, the gator is sleeping. Signifying the completion of a cycle, when the bars candle time mt4 display different colors , the gator is ‘awaking’. The trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds.
The trade is always opened in the direction of the balance of the main indicator’s lines . One thing that is very useful with this indicator is that when the alligator enters the sated phase,it might be time to get out of the market. At the very least, it may be time to start moving your stop loss closer to the current price, as the momentum is starting to slow down. That in and of itself is a very useful feature of this indicator, and it can keep you in more profits if you get out before the trouble starts.
This is followed by an extended sideways period, in which the indicator lines crisscross back and forth. This is a sleeping phase, and most traders are best to stay away. At the far right of the chart, the Alligator is opening its mouth again, or awakening, signaling a downtrend.
The blue arrow will represent when you get a couple of green bars on both sides of the zero level, meaning that the alligator is eating, and therefore you should try to stay in the market. The orange arrow shows duel red bars, suggesting that you should stay out of the market because there is no trend and the alligator is sleeping. Sated phase – The sated phase means that the market is starting to slow down a bit, as the alligator is starting to get full, and therefore is sated. In other words, the trend may be slowing down or even ending. This is when you go from a couple of green bars above and below the zero line to a mix of colors again. At this point, the indicators tell you it may be time to take profit.
Sleeping phase – The sleeping phase is when both of the bars on each side of the zero line in the oscillator are red. This means that the alligator is sleeping, or in other words there is no trend. This would be the same as when using the Alligator Indicator, and the moving averages are all crossing each other and tightening up, showing a lack of any clear directionality. Bill M. Williams (1932–2019) was an American trader and author of books on trading psychology, technical analysis, and chaos theory in trading the stock, commodity, and foreign exchange markets.
What is the Gator Oscillator?
Click Insert, pull down the menu to Indicators, then click Bill Williams. Now, all you have to do is select the Gator Oscillator option. Get $25,000 of virtual funds and prove your skills in real market conditions.
- The orange arrow shows duel red bars, suggesting that you should stay out of the market because there is no trend and the alligator is sleeping.
- By default, Gator oscillator is set with a slight shift forward when displaying oscillator bars.
- It is most harmonious with Fibonacci levels, or support/resistance lines due to its tendency to be volatile and unpredictable.
- Therefore, it Gator columns are close to zero, it means that Alligator sleeps and there is no trend on market (watch pic. 2) The father bar charts are from zero, the stronger trend is.
- Potential clients without sufficient knowledge should seek individual advice from an authorized source.
You do this by taking a 13-period simple moving average of the asset with 8 bars forward. Each trader independently decides which of the signals − on the histogram or on the moving averages − are considered stronger, but the traditional Alligator indicator still looks more confident . Using the Bill Williams Gator Oscillator is relatively simple, but you need to know how to interpret the reading. You should keep in mind that Bill Williams suggested in his Alligator strategies that the market is in one of four potential environments. The alligator can be sleeping, awakening, eating, or sated. When the alligator is sleeping, that means that there is no trend in the market.
How the Williams Alligator Indicator Works
In the awakening phase, when bars are in red and green colors, it suggests that the Alligator is wakening up for a trend. The Gator oscillator is an indicator that plots a histogram below the chart to indicate the trend’s direction. The difference is Alligator indicator uses Smooth Moving Averages, while the Gator oscillator uses a histogram.
All things being equal, the Alligator seriesis a set of indicators that can be useful if you understand how they are printed. At the end of the day, everything is based upon moving averages, which over the longer term work really well with trends, but a lot of traders have trouble trusting just moving averages. It’s almost impossible to trade with just moving averages, as most people will add some other indicators such as a different oscillator or Fibonacci retracement levels, or something else. The main problem with this oscillator is its complicated nature. If you depend on moving averages in trading trends, the gator is a suitable tool for balancing and condensing your strategy. All the problems of trading with a moving average must be taken into account while a trader is making use of the Gator indicator.
At this point, the Gator Oscillator will show up in its own window at the bottom of the chart. There are green and red bars that appear, and a zero line where the indicator separates. The oscillator is different from many other oscillators as it’s actually two oscillators.
You should use other setups in congruence with the trend information that the Gator Oscillator is telling you. Take a look at the chart underneath to see a couple of examples of divergence. Adding the Gator Oscillator to the chart is very simple.
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Gator Oscillator trading strategy
Sated Position – Finally, when one of the two sides turns red, it is a sign that a trend is in a deceleration mode. As such, this means that there is a possibility that the trend is decelerating, which leads to a reversal. The gator is said to be in a sated mode when this happens. Now traders follow the economic events with new vision as inflation in the US seems like decreasing.
The name Gator is a metaphor used by the author because he saw a lot of similarity in the oscillator’s behavior on the chart and a gator in the wilds. In the article, we will keep the author’s metaphoric terminology. We have also looked some of the top strategies to use when using the indicator. Awakening Phase – The second scenario is when one bar turns green while the other one is red and vice versa. When this happens, they typically interpret it to mean that it is in the awakening phase. Sleeping Mode – When the blue and red line are hovering near the neutral line, they say that it is in a sleeping mode.
Her expertise is in personal finance and investing, and real estate. Gordon Scott has been an active investor and technical analyst of securities, futures, forex, and penny stocks for 20+ years. He is a member of the Investopedia Financial Review Board and the co-author of Investing to Win.