technical analysis

Now, let’s move forward to the most important part of this article, the rules of the Bill Williams Awesome oscillator strategy. You are going long in accumulation phase and short in distribution. But you need confluence with other indicators to do this. The positive and negative values are the difference between the two balance lines. The Gator Oscillator indicator is derived from another Bill Williams indicator, the Alligator.


As with any trading strategy, it is vital that you test it, lay out a trading plan, and ensure risk management is priority one. Trading the financial markets is not as easy as many make it out to be. If you have an interest in financial trading, you must have knowledge of two concepts, moving averages and volume…. This means that traders are always looking for means to apply various indicators.


According to the original methodology, you need to set a trailing stop. This position gives us a very close initial stop-loss, which would be the length of the signal bar. The red zone in the chart marks the Alligator sleeping for a long time while there is a sideways trend. So, the big idea is to stay out of the market when the Alligator is sleeping and to be in the market when the Alligator is awake and hungry. Otherwise, entering any trades will yield only losses.

Different colours either side indicate awakening, and this is a good entry point. Green either side is a trend continuation signal – the eating phase. The reason for this is that new information came to the market and changed the balance. During the course of a trade, we can find ourselves changing strategies depending on the market.

The market facilitation index is used to look at a current price movement and measure its strength. This indicator can be used with the Alligator indicator to find and then time quality trade setups. This is achieved by deriving the balance lines from the Alligator indicator and creating two values. This is a good indicator if you are looking to find a possible market reversal or to confirm you have found a trend. The Awesome Oscillator or AO is used to identify the current markets momentum. The Alligator Indicator creates trading signals using convergence and divergence.

Best way of using Forex pivot point indicator in trading

The ideal moment for such actions is the third signal, delivered by fractals. Remember, the oval zone marks the entry point according to the bullish divergent bar, the green and the red lines mark the entry level and the stop level accordingly. Based on the Awesome Oscillator , we add on after three consecutive green bars . Another important thing is the angle of the price bars that must be wider than the angle formed by the Alligator’s mouth. If the price bars are angling away from the Alligator, this is a strong signal of a soon trend reversal.


I recommend trying to trade with a reliable broker here. The system allows you to trade by yourself or copy successful traders from all across the globe. You should test any settings on the historical data before you apply them in real trading. Any MetaTrader terminal offers such parameters by default. These are the Alligator indicator default parameters offered in the LiteFinance client profile.

Step #3: Check if the Awesome Oscillator Indicator histogram after the Second Low is Green

Yet, he says later, that boredom often precedes the beginning of a big move. “So the very time when the market is most boring is exactly the time when a good trader must be on guard for any sign that momentum is building” – says Bill Williams. Later, Williams published a book “Trading Chaos”, which was focused on the principles of fractal geometry. The author convincingly proved the existence of a variable pattern in the chaos of financial markets. The high popularity of this work can be explained by outstanding financial results of the author’s trade, rather than innovative methods of analyzing quotes. Indeed, during 2 years of trading in the stock market, Bill Williams managed to increase his capital from 10,000 to 200,000 USD.

The most important is that it is comfortable for you to analyze the chart, and the technical analysis indicator doesn’t prevent you from seeing bars. Next, the price breaks through the Alligator lines and updates the local minimum. The lip balance line crosses the teeth and jaw line, signaling the end of the uptrend. The above figure displays the hourly timeframes of the BRENT oil price chart. In the hourly timeframe, I prefer using the following settings of the indicator 21;13;8, but I will cover it in detail later. The line is the average strength support/resistance level.

What Is the Williams Alligator Indicator and How Do You Trade It? – Investopedia

What Is the Williams Alligator Indicator and How Do You Trade It?.

Posted: Mon, 13 Dec 2021 08:00:00 GMT [source]

This indicator is often used to time entries and exits. The Alligator Jaw makes the slowest turns and the lips make the fastest identifying possible trade setups. There also can be more than five bars taken to create a fractal, in this case, one of the later bars is the middle finger. One way to trade the Fractal is whenever the market exceeds the outside extreme high on up Fractals and low on down Fractals, go with the outside direction/Fractal point. The long entry is placed above the top of the bullish divergent bar.

How the Williams Alligator Indicator Works

Williams recommends exiting the trade when the price is extremely close to the floating stop order. In a bullish market, a Fractal is a series of a minimum of five consecutive bars where the highest high is preceded by two lower highs and is followed by two lower highs. The opposite configuration would apply to a bearish market. Then some new incoming information begins to affect the traders. There a momentum of new buying, and the is again moving up.


If you want to use the Alligator with these indicators, refer to his books for more information. In our review, we will use the Alligator to point us in the right direction, before entering the trade with a two-bar reversal. The best combinations you can use with the alligator indicator include some of the most simple. As the alligator lines move distinctly higher or lower, you could start looking for new trades. End-pointed SSA of Williams %R is an indicator that runes Williams %R SSA calculation through a Singular Spectrum Analysis algorithm to derive a smoother final output.

A bar implies that a trend is becoming stronger than the previous period, whereas a red bar indicates that the trend is becoming weaker than the previous price action. The Fractal indicator has many applications in trading. To start with, it can pinpoint the areas where traders can place their stop losses and take profit orders. It also identifies the action zones where traders should watch price action keenly. But in all fairness, it is not a comprehensive indicator, and it works best when combined with the Alligator indicator. Bill Williams outlined specific conditions that must be met when combining the two indicators.

  • The Williams Alligator is also know as the Alligator Indicator, is a combination of 3 smoothed moving averagesand they are displaced moving averages.
  • Is there any MFI alternative out there that can remove these things?
  • The Gator Oscillator is particularly visually appealing and can help traders identify trading opportunities in trending markets quickly and easily.
  • The Gator Oscillator appears at the bottom of the image, displaying green and red bars above, and featured below is a middle balance point in its dual histogram.

Traders will occasionally add an “Oscillator” such as the “CCI” to enhance the value of the trading signals. Trading mixes the “Jaw”, “Teeth”, and “Lips” while the Alligator sleeps during the initial part of the price action depicted. The first type of trading with the Bill Williams’ Alligator indicator suggests you don’t use any additional trading tools. The second type of trading strategy employs additional filters to spot entry points.

We make it possible to approach personal finance through an all-in-one solution for investing, spending, and managing money. MetaTrader Supreme Edition has a ‘Trading Simulator’ that enables you to test your strategies against historical data. We hope that you enjoyed this rundown of the various Bill Williams indicators available in MT4, and that it offers you plenty of food for thought. You might also like our discussion of the Best Forex Technical Indicators. Bill Williams is a highly educated man, whose indicators have widespread usage.

Trend formed and direction

Fractal can also be the first signal for the system if there were no signals by reversal bar and AO indicator. If it is the first signal, enter with the minimum lot. The Accelerator Oscillator is based on the Awesome Oscillator.

Similarly, the behavior of the river depends on the bed base structure. The formation is affected by the way you see the market. The market energy is always the path of least resistance.

The “buying above the balance line” pattern is formed by two bars when the price is higher than the Alligator indicator. If the price is lower than the Alligator line, then one more maximum above the entry price in the green zone is required. After opening a position, we’re waiting for the appearance of green three bars by AO and set a pending buy order a little higher than the maximum of the current candle. Once the trend reversed, we top up at the fractals breakdown until we make 5 orders. The signal for topping up to the opened position are three consecutive bars of the same color of AO histogram. Any trading platform will suit for this trading system, as indicators of Bill Williams has long become standard in any terminal.

To his surprise, Bill found that this distance can be defined by the Awesome Oscillator histogram. Inverse Fisher Transform On Williams %R Since Williams R indicator produces negative values, I preferred to add 50 instead of subtracting 50. Williams %R determines overbought and oversold levels. The MFI bar size shows price action similar to the volume indicator showing volume action.

However, they can be a complicated instrument and before getting st… When the balance lines are intertwined, the Alligator is sleeping – and it is therefore a non-trending market. Bill Williams recommended staying out of a non-trending market, contending that a trending market was the optimal condition for making profit. When the balance lines separate, the Alligator is awake and has opened its jaws – and it is therefore a trending market. The two accompanying oscillators can be used to help provide additional information and to help fine-tune your trades. This fractal-style self-similarity provides a key, which Williams contended helps traders to understand the behaviour of the market.

The nonlinear nature of the market processes is proven by the fact that 90% of traders lose employing these types of analysis. The market is ruled by two types of ideas, they are opinions and facts. On the one hand, they are quite powerful, as they, like any other beliefs, have a huge impact on trade and investment decisions. On the other hand, opinions have an influence only on some traders, basically weak holders, who I wrote about in the series of lessons about the VSA model. I use yahoo fiancé and i try to figure out stuff, and some i follow, but the alligator i couldn’t figure out, so i deleted it. Applying tools such as the Williams Alligator and stop-loss protection makes it possible for traders to grow their profits quickly, safely, and using very little starting capital.

The value of this indicator is as a confirmation…not as a signal. Even so, I find that 1- it only accurately confirms about 65% of the time and 2- It filters out over half of the good trades I would normally do. A much simpler and more accurate confirmation of volume & direction is the OBV when combined with a 3 EMA signal line in the same window. Even so I would never trade without a fast moving ATR to verify volatility because volume does not always equal volatility. The BW MFI tries to combine the qualities of Volume and ATR into one indicator but, in my opinion it is not near as good using the OBV and ATR. Again, thank you for providing a very good explanation of a very complex indicator.

This means that the market is full and will now “sleep” in anticipation of new prey . Now you need to spot a moment for the price to start to trade above or below all three lines of the indicator. Research led the trader to the conclusion that the market is chaos and trading is a psychological game. Knowing the psychology and understanding the principles of behavior of market participants, the zones of accumulation and the price’s exit points from these zones are determined.