Long Term Alligator Pivot Strategy

Published:25 February 2019 Updated:4 January 2024

Alligator is one of the most powerful trend binary options indicators. It has been used to create dozens of strategiesSome of which have already been discussed on our Web site. However, all of them were focused on a small signal period. In this article we will consider a trading system based on the Alligator by Bill Williams, but with a greatly increased period and minimal shift. The indicator of the same developer is used as a signal filter. Awesome Oscillator.

Strategy is long-term, but on the 5-second timeframe it is quite possible to trade 1-minute contracts.


Review of indicators and strategy

The market is in a phase of active trend no more than 30% of the total time. The Alligator created by Bill Williams makes it easy to identify not only active price movements, but also those predicted in the near future. The tool consists of 3 curves Moving AverageThe following are the main components of the above-mentioned formula. Intertwined with each other in a certain combination, they form signals. It is not only the sequence of lines that matters, but also the distance between them. The combination of 3 curved lines (red, blue and green) is usually called “alligator’s mouth”. The indicator has 4 phases, which traders call as follows: sleeping, waking (main signal), feeding and saturation.

Awesome Oscillator – simple oscillator, made in the form of a histogram. The values are also calculated using the formula for calculating the arithmetic mean, but with a number of modifications. The histogram shape largely reflects the distance between the Alligator curves at its standard settings, but it does not repeat exactly as it does in the MACD. Bill Williams called his indicator the “Miracle Oscillator” because of its potential for technical analysis. It reveals its full potential in combination with other indicators from the same developer.

The strategy is based on differentiation of trend reversal points. The extended period of the Alligator allows to ignore small price fluctuations. The sensitivity is preserved only to strongly pronounced trends. This is the optimal time to enter the market. The Miracle Oscillator in this combination is used as a signal filter.


Terminal setup

The strategy can work perfectly on the platform INTRADE.BAR (site). It can be used on other platforms, for example, in the terminals of brokers Stars Binary or PocketOptionBut you should find the best combination of timeframe and term on your own binary options expirations. In our case, these parameters are set at the value of 5 seconds interval and 60 seconds of transaction duration. Any asset is suitable for trading, but we recommend choosing CRYPTO IDX. At 5-second timeframe only cryptoindex is able to give full-value price formations. The low volatility of ordinary currency pairs does not allow for a full-fledged price formation in 5 seconds. Japanese candle.

Indicator settings

  • Alligator – period parameters: jaws – 50, teeth – 20, lips – 15, shift of all lines – 1;
  • Wonderful Oscillator – the indicator has no adjustable period parameters.

A strong increase in the Alligator period leads to a decrease in the distance between the curves. Therefore, it is recommended to manually increase the vertical scale of the chart by scrolling in the area of the left vertical chart scale, where the quotes of the asset are indicated.


Trading signals by strategy

When trading on this strategy, the trader should be patient, skipping most of the signals. The optimal point to enter the market is the moment of pronounced trend reversal. Given the small 5-second interval of the chart, there is no need to wait long – there are 12 candles in 1 minute.

  • Down signal – crossing of the green and red curve on a downtrend reversal, as well as the transition of the blue line from the lower to the upper extreme position. Confirmation of the signal is the formation of red bars below the N/A line.
  • A signal to go up – crossing of the red line with the green line, as a result of which it briefly acts as the lower boundary of the “alligator’s mouth”. Then the blue curve moves to the lower position. Confirmation of the signal is the appearance of ascending green bars above the border of N/A.

The picture above shows examples of correct signals from this strategy. As you can see, on the eve of the lines’ crossing and the Alligator’s “awakening”, the blue line is significantly behind the other two lines. In this case it can be used as a volatility indicator. If all lines are in a tight bunched bundle, it is a sign of low market activity and lack of pronounced trends. Traders are advised not to trade in such a situation.

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  • That’s very interesting. I’ll definitely give it a try.

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