forex trading strategy Alligator for binary options
Our proposed Alligator forex trading strategy is based on the known Forex indicator from Bill Williams. This algorithm is interesting in that it points quite well to periods of flute and trend. Accordingly, we will use it to enter the market with the emergence of a directed movement.
Despite the fact that on the chart the Alligator indicator looks wise enough, in fact, it is not so difficult to work with it. We will show how to receive signals from it that a trend is beginning in the market.
Description of forex trading strategy
Before you go directly to the description of this system, you must give a brief summary of the indicator that is used in its basis. This algorithm consists of three moving averages to which the author gave poetry titles.
"Alligator Jaw" is the 1st sliding average. Its period is 13 and it is offset by 8 periods. This curve is responsible for predicting long-term trends as it is the longest.
Finding the price below this curve suggests a downtrend.
When the price turns out to be higher, the upward movement can be considered.
"Alligator Teeth" is the 2nd sliding average. It is usually indicated in red on the graph. Its period is 8 and it shifts by 5. This curve indicates a trend, only with a smaller period. It is more sensitive to changing market sentiment.
Alligator 's Lips is the 3rd moving average. It is the most sensitive of all. Its period is 5 with displacement 3.
In order to open a transaction using this algorithm, it is necessary to closely monitor its behavior. When the curves of the algorithm are close to each other and intertwined with each other, it is not necessary to enter the market. The author himself called such a condition - Dream of Alligator.
But once the curves begin to diverge, there is a clear message about the future trend. At this point, you can open a deal.
Buying binary options is recommended when Alligator "wakes up." The author of this instrument himself noted that when "awakened, Alligator is very hungry." This means that once curves intersect and diverge from each other, the possibility of buying a contract can be considered.
In the upward trend, the curves of this algorithm go in the following order - Jaw, Teeth, Lips. That is, the longest moving average is under the price schedule and under the rest of the moving average, indicating an overall upward trend.
When downward movement occurs on the market, the curves are placed in reverse order above the price graph. Alligator 's jaw is at the top, the other curves go lower. As lines diverge relative to each other, the trend intensifies.
Despite the fact that at first glance everything seems very simple, it is quite difficult to work with this indicator in practice. Therefore, we recommend adding another algorithm that will give clearer signals or use a candle analysis. A pinbar forex trading strategy may also be a working option.