Allegator Forex is a popular technical indicator used by traders to identify a trend in the market. It is based on the concept of moving averages, but it uses a different approach to calculate the moving averages. In this article, we will explain how to use Allegator Forex to trade in the forex market.
What is Allegator Forex?
Allegator Forex is a technical indicator that uses three moving averages to identify a trend in the market. It was developed by Bill Williams, who is a renowned trader and author of several books on trading. The three moving averages used in Allegator Forex are the Alligator’s Jaw, Alligator’s Teeth, and Alligator’s Lips.
The Alligator’s Jaw is the slowest moving average, and it is calculated using the 13-period smoothed moving average. The Alligator’s Teeth is the intermediate moving average, and it is calculated using the 8-period smoothed moving average. The Alligator’s Lips is the fastest moving average, and it is calculated using the 5-period smoothed moving average.
How to use Allegator Forex?
Allegator Forex is a trend-following indicator, and it is used to identify the direction of the trend in the market. The following are the steps to use Allegator Forex:
Step 1: Add Allegator Forex to your chart
To use Allegator Forex, you need to add it to your chart. You can do this by clicking on the “Indicators” button on the toolbar and selecting “Bill Williams” from the list of indicators. Then, select “Alligator” from the list of indicators.
Step 2: Interpret the signals
Allegator Forex generates signals based on the crossover of the three moving averages. When the Alligator’s Jaw (the slowest moving average) is above the Alligator’s Teeth (the intermediate moving average), and the Alligator’s Teeth is above the Alligator’s Lips (the fastest moving average), it indicates an uptrend. Conversely, when the Alligator’s Jaw is below the Alligator’s Teeth, and the Alligator’s Teeth is below the Alligator’s Lips, it indicates a downtrend.
Step 3: Trade the signals
Once you have identified the direction of the trend, you can trade the signals generated by Allegator Forex. When the Alligator’s Jaw crosses above the Alligator’s Teeth, and the Alligator’s Teeth crosses above the Alligator’s Lips, it indicates a buy signal. Conversely, when the Alligator’s Jaw crosses below the Alligator’s Teeth, and the Alligator’s Teeth crosses below the Alligator’s Lips, it indicates a sell signal.
It is important to note that Allegator Forex is not a standalone indicator, and it should be used in conjunction with other technical indicators to confirm the signals. Additionally, traders should use risk management strategies, such as stop-loss orders, to manage their trades.
Conclusion
Allegator Forex is a popular technical indicator used by traders to identify the direction of the trend in the market. It uses three moving averages to generate signals, and traders can use these signals to trade in the forex market. However, traders should use Allegator Forex in conjunction with other technical indicators and risk management strategies to ensure that they are making informed trading decisions.
