How to Trade the Alligator Strategy for More Profits

Can the Alligator strategy make you a profitable trader? How do you trade it to make more money? Which Alligator trading strategy is the right one? How do you use this Alligator indicator properly without blowing up your accounts? Let’s find out.

What is the Alligator Indicator?
The Alligator indicator, also known as Williams Alligator, is one of the most useful indicators out there. It is really easy to understand, not because of its simplicity, but because of the interesting names it comes with. On TradingView, the Alligator indicator will appear with three lines. They look very similar to moving averages and are called the Jaw, Teeth, and Lips. That’s right. They are named this way because the Alligator indicator works and looks very similar to the jaw, teeth, and lips of a real alligator.

How the Alligator Indicator Works
The legendary trader Bill Williams created the Alligator indicator to find the trend in the market. He said that more than 70 percent of the time, the financial market ranges sideways and trends only 15 to 30 percent of the time. Williams believed that institutional brokers make most of their money in strong trending markets. And I’m sure most traders will agree.

The Alligator indicator is a trend-following indicator used to find the trend direction of a stock or forex pair. Here’s how it works:

Uptrend: When the price is above all three lines of the Alligator, the market is considered to be in an uptrend.
Downtrend: When the price is below the Alligator indicator, the market is considered to be in a downtrend.
Furthermore, the three lines—Jaw, Teeth, and Lips—work very similarly to the mouth of a real alligator:

Trend: If the Jaw, Teeth, and Lips lines are far away from each other, the market is considered to be in a trend. You can also say that the mouth of the alligator is open and the alligator is awake.
Range: If the Jaw, Teeth, and Lips are close to each other, the market is considered to be in a range. In other words, there is no trend going on. You can say that the alligator is sleeping since the mouth of the alligator is kind of closed.
The Williams Alligator Trading Strategy
So, here’s how the complete Williams Alligator trading strategy goes:

Uptrend Setup: If the price is above all Alligator lines, the mouth of the alligator is open, and the alligator is awake. Since the alligator is awake and the price is above the alligator’s mouth, the price is considered to be in an uptrend. The strength of the trend is determined by how far the Alligator lines are from each other. If all three lines are far away from each other, a strong trend is occurring. If they are not that far apart, a decent trend is occurring.
Range Setup: If the Alligator lines are close to each other, the market is considered to be in a range. It means there is no trend going on, and you should avoid taking any positions. You can also say that the alligator is sleeping. Most new traders lose money in range markets. You can use this indicator to identify a sideways market to avoid losing money.
Using the Alligator Indicator for Entry Signals
Now that we understand how to identify trending and ranging markets using the Williams Alligator indicator, let’s see how some traders use this indicator as an entry signals generator.

Conclusion
That’s all. Now you know how to use the Alligator indicator properly.

I am going to test this indicator 100 times to show its real win rate. I will do that in the next video.

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