In fact, this is a modification of the Alligator indicator, which turns a system of three moving averages into a normal oscillator. The trade is always opened in the direction of the balance of the main indicator’s lines . Ideal for opening a trade is the situation where Gator Oscillator shows only green bars with a growing amplitude, which indicates the beginning or continuation of a strong trend. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
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You should keep in mind that Bill Williams suggested in his Alligator strategies that the market is in one of four potential environments. When the alligator is sleeping, that means that there is no trend in the market. When the alligator is awakening, it is starting to form a trend. When it is eating, it is continuing the trend, and when it’s sated, that means that it is slowing down, perhaps suggesting a lack of momentum. At this point, the Gator Oscillator will show up in its own window at the bottom of the chart.
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If the indicator oscillates near the zero level, it indicates the end of the current trend or its absence. 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. Labor Market and Real Estate Market data was published yesterday.
When both bars above and below the centerline are red, the gator is sleeping. Forex data can be compared to fuel and software that uses this data is like an engine. Gator Oscillator was created as an auxiliary tool for trading using the Alligator indicator, so it gives practically the same signals. Respectively, min of the lower histogram indicates the maximum discrepancy of the “Lips” and “Teeth” lines.
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Remember, this oscillator essentially just measures the difference between the three moving averages that make up the Alligator Indicator. 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. If you make use of other tools, such as the MACD, and do not favor simple moving averages, theGator may not provide a lot of additional value.
Signifying the completion of a cycle, when the bars display different colors , the gator is ‘awaking’. The indicator is located in an additional window under a price chart and consists of the two histograms which are separated by a zero line. Notice that the Gator Oscillator shows only the presence of a trend and not its direction. As a result, it’s better to use it together with the Alligator Indicator or other tools of technical analysis. Both of these indicators are built into the Metatrader platform, so there’s no need to download anything, as you can simply click a few buttons and place these indicators on your charts. Join thousands of traders who choose a mobile-first broker for trading the markets.
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It’s an easier way to see the same information, therebymaking it very useful. We will conclude by repeating that the oscillator is suitable to trending markets. It is most harmonious with Fibonacci levels, or support/resistance lines due to its tendency to be volatile and unpredictable.
The indicator is then interpreted on the basis of a hypothesis that each phase of the trend has a life cycle of its own, indicated by the awaking-eating-stopping-sleeping of the gator. When a phase of the trend is at its incipient stages, we will observe that the gator is waking, that is, one of the upper or lower bars will turn green. After that, as the trend accelerates and reaches its climax, we will note an increasing number of ‘double greens’ where both the upper and the lower bars are green. As the phase runs out of energy, and begins to slow down, one of the previously green bars will turn red, signalling that the gator is sated. And when both bars are red, the phase has ended, anticipating a new cycle. The Gator oscillator is a forex trading tool developed by Bill Williams.
Not always both indicators work synchronously, as a rule, Gator Oscillator is late. The minimum amplitude of the Gator means the weak activity of the main indicator. Open Level Up Bonus account in web or mobile version of FBS Personal Area and get up to $140 free to your account. You should use other setups in congruence with the trend information that the Gator Oscillator is telling you. Moving averages are lagging indicators, and therefore have a bit of a delay.
The main advantage of the Gator indicator is the compactness of its display. Gator Oscillator is based on the Alligator and shows the degree of convergence/divergence of the Balance Lines . The top bar chart is the absolute difference between the values of the blue and the red lines. The bottom bar chart is the absolute difference between the values of the red line and the green line, but with the minus sign, as the bar chart is drawn top-down. The most reliable strong trend signals can be considered at the extreme points of the histogram (max/min) – a trader can trust them completely. Emergence of the max/min on histograms means presence of a strong trend at the market.
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 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. Sleeping phase — The sleeping phase is when both of the bars on each side of the zero line in the oscillator are red.
Data collection notice
The top half of it can be looked for bearish divergence, while the bottom half can be used to try to find bullish divergence. In order to take advantage of the Gator Oscillator, you need to understand how to read these dual bars, as they give you different readings based upon the colors on both sides of the zero line. In order to simplify things, you can refer to this section when trying to use it.
These values, called balance lines, are calculated and shifted into the future by an amount specified by the trader. If the moving averages themselves are depicted on the charts, the jaw will be blue, the teeth will be in red, and the lips will be green most of the time. In our graph, the smoothed moving averages (i.e. balance lines) are not shown. The Bill Williams Gator Oscillator is a useful indicator, but it’s essentially the same thing as the Alligator Indicator.
After all the sides of the indicator were revealed, it is right the time for you to try either it will become your tool #1 for trading. Typically, in real strategies, this indicator is used by the active followers of Bill Williams, but necessarily it should be complimented with the other tools. In any case, when a potential entry point on Alligator indicator appears, you need to pay attention to the amplitude of the Gator Oscillator histogram.
Max of the upper histogram matches the period of the greatest discrepancy of the “Jaws” and “Lips” lines of the Alligator. Going forward, it’s crucial that you get used to reading the indicator so starting out on a demo account is probably paramount at this point. By understanding the overall attitude of the market, meaning whether or not it is trending, you can start to employ the right strategy. To give you an idea of how this looks with the Alligator Indicator, take a look at the chart below and notice how the histogram spreads out further when the moving averages are spread out. It’s just a simplification of how to read what is essentially the same indicator.
It shows the degree of convergence/divergence of the balance lines. The top bar is the absolute difference between the Jaw and Teeth lines. The bottom bar is the absolute difference between the Teeth and Lip lines . The user may change input , method , period and shift lengths.