Alligator Indicator - Crypto Academy /S5W3-Homework Post for kouba01

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1 # Discuss your understanding of the use of the Alligator indicator and show how it is calculated ?

A pioneer trader Bill William developed this Alligator indicator. According to him market trends spend their most of the time in sleeping like 70-80 % of time while rest 20 to 30% time market is in trend, People earn more benefit during trending period. This technical indicator use smooth moving average to determine trend periods which is very cool and helps a lot for beginner.

Below is the method to calculate Alligator indicator :

The Jaw, Teeth, and Lips of the Alligator indicator are the three moving averages or midpoints that open and close in reaction to creating patterns and trading ranges:

Median price = (High + Low) / 2
Alligator jaw = MMA (Median price, 13, 8)
Alligator Teeth = MMA (Median price, 8, 5)
Alligator Lips = MMA (Median price, 5, 3)

1. Jaw (blue line): This line starts with a 13-bar SMMA and is smoothed out by eight bars on succeeding values.

2. Teeth (red line): This line starts with an eight-bar SMMA and smooths out to five bars for consecutive values.

3. Lips (green line): This line starts with a five-bar SMMA and is smoothed out with three bars on consecutive values.

2 # Show how to add the indicator to the chart, How to configure the Alligator indicator and is it advisable to change its default settings ?. (Screenshot required)

Firstly, I open FTX Exchange because it is simple to use and user friendly.

In the above image you can see that the arrow is indicating the Indicators.

In the above image it is clearly shown that I have searched for William Alligator, I chosen second option which is William Alligator.

After Selecting William Alligator Indicator your Trading chart will look like the above image. You will see three indicating lines which are basically an Alligator's Jaw Teeth and Lips as you can see in the next image.

Configuration :

• By double clicking on any indicator line a setting window will be open as shown in below images.

• Here you can configure the Alligator Indicator, In below image you can see input settings which is related to the length of Alligator's Jaw, Teeth and Lips.

• In the second image it is shown that what is style of an Alligator indicator means basic color lines of Indicator

About Default Settings :

After completing my research on Bill William Indicator, I can say that it is not advised to change Indicator's default setting the default setting is best for trading because it has developed by a great pioneer trader in fact it is suggested by Bill William to use default settings, In above screenshots you can see that there is an option to re-change the setting to default if you have changed it.

I would like to share you some reason why it is recommended, Time Period is directly proportional to the sensitivity while length is inversely proportional to the sensitivity.

As we are learning Crypto we already know what is Fibonacci numbers, William Alligator Indicator Number also a part of Fibonacci numbers which helps in market trend.

3 # How do we interpret this indicator from its 3 phases: the period of rest(or sleep), awakening, and the meal phase?(Screenshot required)

The Alligator Strategies are divided into three categories using the standard run indication.

The Rest Period :

The lack of trend is determined whenever the three alligator threads gets close together or sometimes entangled. Simply put, if you see red, green, and yellow lines entwined, the market is inactive, and you should wait until something significant occurs before engaging in trading.

The period of awakening :

The waking stage occurs when the two lines start to separate and the several lines start to move in similar direction, signaling that investors will boost their transactions and enter again in the market.

The period of Food :

Traders must keep profits in order to follow the trend during the waking stage. At this time, the moving averages are moving in a manner that is parallel to each other, confirming a definite trend in the market.

4 # Based on the layout of its three moving averages that make up the Alligator indicator, how can one predict whether the trend will be bullish or bearish (Screenshot required)

In Alligator Indicator we have three moving indicating lines as we have briefly discussed above with screenshots. These lines are the main source of indications of market trend whether it will rise or set to earth.

In above question I told you about three phrases of alligator that is basically our understanding towards market trends. When all three lines are together this means Alligator is sleeping or we can say that market is down and when lines are getting separation it means market is about to rise just like an hungry alligator wake up from hunger.

This trade chart is clearly showing that from sleeping, market is in awakening condition.

As blue line is now at the top now market is dropping back.

5 # Explain how the Alligator indicator is also used to understand sell / buy signals, by analyzing its different movements.(screenshot required)

This is a technical indicator and very useful tool for trading, This indicator provide buying and selling signals through indicating lines .....

Buy Signals :

From Alligator Trading Tools buying signals can be understand when Green line ( Lips ) start its upward movement after sleeping for some time period and Blue line ( Jaw ) make its place in the lower part while Red line ( Teeth ) remains in the middle it is a Buying signal, You can easily understand from below screenshot

Here you can see that green line is rising while red line is in the middle and blue line is falling.

Sell Signals :

Selling signals are totally opposite as compared with buying signals, These signals are easy to understand because market is starting to lose it's strength and from Alligator Indicator, Blue line ( Jaw ) start rising and Green line ( Lips ) start falling while red line is in the middle, You can easily understand from below screenshot

Here you can see that blue line is rising while red line is in the middle and green line is falling.

6 # Do you see the effectiveness of using the Alligator indicator in scalping trading style? Explain this based on a clear example.(Screenshot required)

This is the best part of this assignment by Professor @kouba01, Scalping can be understand as the advantage which is made by trader or broker in very short time, it could be minutes or sometimes second. Let me show you the screenshot of one minute trading chart.

From this chart it could be seen clearly that how effective is Alligator Indicator in short time trade or profit making, all the trading lines getting separations and working in proper frame to give us right directions.

7 # Is it necessary to add another indicator in order for the indicator to work better as a filter and help get rid of unnecessary and false signals? Use a graph to support your answer.

There are numerous indicators on the market, none of which is 100 percent effective. There are a variety of other things that can provide erroneous signals. Some of these variables include price action noise and trading whales that make fake transactions, all of which serve to create fear in the market.

Regardless, the indication is reliable enough to make us money. It is, nonetheless, the responsibility to use more indications to retrieve confirmations and filter signals.

Indicator ROC :

First, I'll discuss how the ROC indicator works. This indicator calculates the rate of change and the strength of the movement in relation to a current time period

When this oscillator goes in one direction, it generates highs or lows. However, the alligator indicator shows us that its lines from the mouth diverge, which is known as the ROC indicator divergence, and it is time to get ready since the real direction will be that of the roc.

8 # List the advantages and disadvantages of the Alligator indicator:

Advantages :

• This Indicator is really easy to understand and user friendly.

• Visual understanding of the given signals and strong movements.

• Basics In the trend markets, there are three lines.

• Allows you to work quickly with another indicator to filter.

• The number of false sales is rather low, which may be preferable for one or two average mobile phones.

Disadvantages :

• The price movement is always a fraction of a second slower than the signal provided by the moving average's lag.

• A large number of misleading signals are sent in a non-trending market, resulting in false crossovers.

• There is a chance of missing signals when lines are closed.

• There are fake signals while trading with Alligator Indicator these signals can hurt the profit of beginner.

9 # Conclusion :

To be really honest, It is my first time that i come to know about this great technical indicator though it has some disadvantages but this Indicator is really great for beginner and smart.

This Indicator basically works with market trend, It has three moving lines which indicates the upcoming trend and downfall in market, These moving averages has a time period as I have discussed above.

This Indicator will keep you up with the market because, It always indicate the direction of rise and downfall, Bill Williamson has a great mind like how he compared this technical thing with
a wild animal and develop this helping Indicator.

That is all for my homework post, Thanks for reading it, This assignment is really informative and amazing. It improves my exploring skills and trading skills, I wish to hear more lectures from Professor @kouba01. ( Greeting )