“Alligator” is a financial instrument that determines if quotations in currency exchange markets tend to rise or decline. It is used in any trend strategies to improve the accuracy of projections. The indicator was created in 1995 by Bill Williams. For a long time it was used in classical trading and in Forex, from where it spread successfully to binary options trading.
The indicator consists of a graphic figure – three smoothed moving averages, consisting of 5, 8 and 13 periods. Each line can be conditionally seen as a moving average, which has an individual color and price range. The possibility to customize the color makes the work with the indicator more convenient and speeds up the identification of lines by the trader. This is important when working on short expiration periods when every second is important.
How the indicator works
The mechanisms of the “Alligator” indicator are based on a combination of test lines that react to the strength of the trend. Three lines form a graphical display of the trend, which is based on a predetermined number of candles:
- Jaw (the red line) – 13 candles;
- Teeth (the orange line) – 8 candles;
- Lips (the yellow line) – 5 candles.
When all three lines are entangled, the alligator is asleep. This means it is not recommended to trade under these conditions. You can make outlooks within your own strategy or use other indicators, but you do not need to count on an alligator.
When only two lines overlap, this is a clear sign to act. A price trend begins, within which a trader can make projections according to his/her 60-second strategy of binary options.
When the lines are separated from each other, the alligator eats. The trader has to trade as long as the candlestick trend is above or under the alligator. Since the current price trend continues throughout the observed period, the accuracy of the projections will be as high as possible.
The trader should wait for a real trend, the forecast for which is likely to be confirmed, to appear. It is important to have patience so that the work with the 60-second binary options strategy is efficient. Maximum accuracy is achieved when the three moving averages are separated from each other.
The use of the “Alligator” indicator in conjunction with the 60-second strategy
- Proven models of the indicator operation allow you to easily detect the next direction of price movement;
- The tool is suitable for any 60-second binary options strategy that can be used on crypto-assets, currency markets, futures, stocks etc;
- High profitability due to the accuracy of projections and the ability to buy the same assets several times while trading, thereby multiplying the profit.
Since a trader can buy new binary options every 60 seconds, the amount of profit depends directly on the selected asset and the size of the transaction. This way, 60-second schemes work best; as soon as you determine correctly the direction of the trend with the help of the alligator, your projections will make money every minute:
IQ Option offers from 20% to 90% profit from a transaction. The profitability at the level of 50% will bring $5 from each projection of $10. Provided that eight out of ten transactions will be confirmed, the trader will be able to earn up to $120 every 30 minutes. If the value of an option is increased or a more profitable asset is chosen, the profit can be multiplied several times.
Is the “Alligator” friendly to other than 60-second strategies
The “Alligator” indicator can be used for trading on longer expiration periods. In this case, you need to increase (see the first screenshot) the number of candles that are taken into account when forming the “teeth”, “jaws” and “lips”. For 60-second strategies, the norm is 13, 8 and 5 candles, respectively. Increase these indexes depending on the chosen expiration time: 10 minutes – 130, 80 and 50 candles; 15 minutes – 195, 120 and 75 candles etc.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future
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