“Chomp chomp, Look out, it’s the Alligator…”

Hi there,

Hope all is well.

Here’s a pretty good indicator, its called the Alligator.

Some people might look at this and say, hey Loz, this looks a lot like the Ultimate Golden Cross.

What Looks like, and what might smell like, doesn’t necessarily mean it’s one. (what ever that may be)

You see, yes indeed, Ultimate Golden Cross does use Moving averages, but it’s not what it only uses.
There’s hidden elements in there purposely left out!

Also, the Alligator works a little differently.

• The blue line (Alligator’s Jaw) is the Balance Line for the time frame that was used to build the chart (13-period Smoothed Moving Average, moved into the future by 8 bars);
• The red line (Alligator’s Teeth) is the Balance Line for the value time frame of one level lower (8-period Smoothed Moving Average, moved by 5 bars into the future);
• The green line (Alligator’s Lips) is the Balance Line for the value time frame, one more level lower (5-period Smoothed Moving Average, moved by 3 bars into the future).

However, some of the principles remain the same. It’s not what you would normally expect, most traders tend to take the indicator at it’s explained face value, rather than thinking outside the box, and you’re going to need to think out side the box if you want to remain in the top 5% of the traders out there.

General rule of thumb is when the red and green line cross under or above the blue line, its a sign to go short, or long.

However, this tends to a lot of losing trades. So what we’re going to have to do is add extra analysis to our decision making when we see a particular formation appearing.

What you’re going to need to do, is wait for all three of the alligators lines to line up and cross in the same direction, and take note of how far the cross is from the candle.

Now you’re going to need to experiment for a bit here, ignore the 1 and 5 minute time frames, concentrate on 30 minute, 1 hour and 4 hour time frames, 15 minute time frame is ok, but don’t expect to make as many pips as you would on higher time frames.

If you’re working off the 15 minute time frame, don’t be so anxious to jump out of the trade, it can take as long as 2 hours for your TP (Take Profit) level to be hit.
Work with 10-15-20 pip take profit targets on 15 minute time frames…

15-20-25 pip targets on 30 minute time frame, allow for at least 3-4 hours for TP to get hit
20-25-30 pip targets on 1 hr time frames, allow for at least 4-7 hours for TP to get hit
30-35-40 pip targets on 4 hr time frames, allow for at least 5-12 hours for TP to get hit.

As to the stop loss levels, use the previous high as your stop loss if you’re in a sell / short trade, and vice versa for a buy trade, find the previous low.

If your stop loss is fewer than 20 pips, find the next high/low and use that instead.

Now if you’re trading this manually, seeing the trade through, you don’t necessarily need to leave it til it hits the take profit targets, you can let the trade ride, moving your stop loss closer to your opening price to protect the trade as much as you can as gains are being made, then exit the trade when the candle closes back above or below the Alligators Jaw…

For instance: if you’re in a buy trade, you’re looking for the candle to close below the Alligators Jaw, if you’re in a sell trade, you’re looking for the candle to close above the Alligators Jaw…
However, you will notice that this exit strategy isn’t as profitable as the higher time frames, ie, 1hr and above.

Here’s a video that explains how to use it… also, in up and coming modules, we’re going to show you how to mix other indicators to come up with as many forex strategies as possible…

I hope this helps and you’re finding the posts so far helpful

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The more people we can help understand how the forex markets work and profit from it, the bigger and better our Forex Underground Signal Lab will be.

So help me, to help you and your friends become a force that the Brokers will not want to mess with!

Until the next post, take care and happy safe trading!

All the best

Loz

Looking for the ONLY Indicator to Produce 100% Wins
http://UltimateGoldenCross.com

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Tagged as: alligator indicator, forex analysis, forex strategy, technical analysis