This type of indicator that was invented by Bill Williams uses Three (3) x smoothed moving average (SMA) indicators calculated using five, eight and 13 periods (5,8,13) which are all Fibonacci Numbers, one of the indicators uses the simple moving average type to slow down the indicator.
The calculations are as follows for the (SMA):
- The Sum of the closes prices x periods back.
- Smoothed moving average of 1st candle.
- Smoothed Sum of the previous candle.
- Smoothed moving average of the current candle.
The financial markets trend just 15-30% of the time, this means that the prices running in channels or sideways moving with no real trend strength 70-85% of the time. The Gator indicator is a technical analysis tool that uses three moving averages to create the Jaw, Teeth and Lips of the Alligator, The Jaw will make the slowest turn in direction and the Lips will show the fastest tun, as you can see below the green line (Lips) has turned the quickest and the blue line (Jaw) turns the slowest.
How to Trade Using this Indicator
This indicator is very easy to use, there are three (3) lines on the chart which represent the Jaw (blue), Teeth (red) and Lips (green), as you can see from the above chart, when the lines are close together the trend is moving sideways and the alligators mouth is closed, in this scenario you do nothing when the Lips and the Teeth begin to widen you get ready to trade and when the jaw starts to open you enter a trade.
Combine with Gator Oscillator
On its own this indicator will just tell you when a trend may start or change direction, the creator of this indicator (Bill Williams) recommends that you also use the Gator Oscillator indicator as an additional indicator to determine the strength of the trend, this indicator can be downloaded for free form our website.
This Gator indicator provides settings to help you tailor it for all symbols and timeframes, we suggest that you experiment until you find the best values for the traded symbol, you can also change the colour and thickness of each bar.
How To Install & Open
First, make sure you have the cTrader trading platform installed and then simply unzip the file and double-click on it to automatically install it onto the platform.
Remember, this is an Indicator.
If you have any questions, please first search our product help forum for the answer, if you cannot find it, post a new question.
Join Telegram Community
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