Olymp Trade Alligator Indicator

This indicator signals the absence of a trend, formation and direction. In 1995, Bill Williams first introduced the Alligator indicator to the financial markets.

Bill was an early market psychology pioneer, and he also developed several original analysis schemes for trading that are based on the chaos theory. He is also the founder of the very popular school “Profitunity Trading Group” and the author of various bestsellers on trading.

Williams started trading while he was a student at university. At that stage, one of Williams’ friends was already trading and was making a good income. Under his tutelage, Williams took his first trading steps and also managed to achieve good results.

Williams decided to trade independently once he saw himself as an experienced trader, but he unfortunately normally made a loss. After this carried on for a number of years, Williams decided to start relying only on himself, and his intuition, knowledge and experience. This resulted in him gradually starting to improve, and he started making profits regularly. Williams founded the “Profitunity Trading Group” trading school in 1984, and it is still seen as being one of the pillars of modern trader training to this day. Although the teaching methods used are kept secret, and students all have to sign non-disclosure agreements, it is known that the teaching uses technical analysis of the so-called trading chaos combined with the psychology of trading.

Bill Williams published his first book, “Trading Chaos”, in 1995. This resulted in an information bomb explosion, blowing the minds of many market participants. The reason for this was that the book denied the use of technical and fundamental analysis and attributed the features of a natural phenomenon to the market. Although the book was initially decried, over time many supporters were attracted by the revolutionary theory. Eventually, indicators created by Williams started appearing in graphic analyses more frequently, were expounded by tabloids, and ultimately became an essential part of forecasting markets.

Williams continued simplifying his trading system for nearly 50 years, and as it became simpler, it generated more profits. Nowadays, the Williams family still trade on stock markets, and they frequently donate half of their profits in support of charitable causes.

Description of the Olymp Trade Alligator indicator

The Alligator indicator makes use of 3 moving averages that have been smoothed, and are set at 5, 8, and 13 periods.

These 3 moving averages make up the Lips, Teeth, and Jaw of an Alligator, and it opens and closes by reacting to changing trading ranges and trends:

The Jaw is a moving average that has been smoothed over thirteen periods, moved into the future by eight bars.

The Teeth is a moving average that has been smoothed over eight periods, moved into the future by five bars.

The Lips is a moving average that has been smoothed over five periods, moved into the future by three bars.

The Jaw, being the longest moving average, shows the price levels that should be set if the market is not influenced by any other factors. This is a long term analogue of a fair market value, and the reason it’s known as the “Balance Line”.

As long as the price of the asset is above the Jaw, the market keeps on moving up, and if the price is below the Jaw, the market goes down.

Williams calls the different moving averages Balance Lines. He says that when they are all crossed, the Alligator is sleeping. The longer the Alligator is left sleeping, the hungrier it will get. This is logical, and it is in line with various concepts used in technical analysis. Williams believes that when the Alligator wakes up after sleep for a long period, it is extremely hungry and will start chasing the price until the hunger is satisfied. Once this happens, the distance between the moving averages becomes smaller until they converge into narrow bands, signaling the trend’s end.

Configuration on OlympTrade

The indicator should be configured in a separate technical analysis window on the Olymp Trade platform. The Alligator can be found on the Indicators tab:

The settings The Alligator Indicator

The standard settings should be left at their default values and the Median Price should be selected in the Source tab.

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