This is the second article in our Alligator series.

Alligator Indicator Explained - What is the Alligator Indicator?

In that article, we covered the background of the Alligator indicator, how it is calculated, and how it looks on a chart.

It consists of three lines, overlaid on a pricing chart, and was created to help the trader confirm the presence of a trend and its direction.

Alligator Strategy - How to Use the Alligator in Forex Trading

The Alligator indicator can also help traders designate impulse and corrective wave formations, but the tool works best when combined with a momentum indicator. Once the trend forms, the Alligator helps the trader remain in his position.

One must remember that the Alligator, since it consists of moving average crossovers and is shifted ahead, will lag more than the CCI. The CCI will send the first alert, followed by the Alligator crossover and a closing candle above or below the three moving averages See annotations.

When entwined, the Alligator is said to be sleeping. Patience is the message given here.

When the lines are apart, the Alligator is eating. Stay in the trade as long as the candlesticks ride above or below the Alligator.

Live Trading Example - Forex Alligator Indicator Trading System - ForexBoat Trading Academy

When the lines converge or cross, it is time to consider entering or exiting, although a momentum indicator will fix a better exit point. Traders are also attentive to closing Candles. In the above example, an exit signal occurs when a Candle closes above the center Red line or teeth of the Alligator.

During the second downward move, the Alligator, for this reason, would have kept you in the trade a little while longer for more profit. Skill in interpreting and understanding Alligator signals must be developed over time, and complementing the Alligator tool with another indicator or pattern of pricing behavior is always recommended for further confirmation of potential trend changes.

In the next article on the Alligator indicator , we will put all of this information together to illustrate a simple trading system using this Alligator indicator. Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors.

The possibility exists that you could lose more than your initial deposit.

How to Use Alligator Indicator in Forex Strategies - ForexBoat Trading Academy

The high degree of leverage can work against you as well as for you. OptiLab Partners AB Fatburs Brunnsgata 31 28 Stockholm Sweden Email: You are using an outdated browser. Please upgrade your browser to improve your experience.

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