Trading on Iq Option with Alligator – a trend-craving carnivore
In accordance to Alligator, it is believed that any financial market is trending 15% to 30% of the time and the rest 70% to 85% it shows sideways movements. The Alligator is good at indicating the periods when a market has a high volatility. Thus, the Alligator helps you to identify excellent entry and exit points.
What is Alligator?
Actually, the Alligator is a combo of three moving average lines with various periods and they are called the jaw, the teeth and the lips. All of them are shifted ahead for a specific period of time, so that all three align wonderfully with each other. When you work with IQ Option, the standard setup looks like this:
1) The Alligator’s Jaw (red) is a 13-period SMA, moved into the future by 8 bars;
2) The Alligator’s Teeth (orange) is an 8-period SMA, moved into the future by 5 bars;
3) The Alligator’s Lips (yellow) is a 5-period SMA, moved into the future by 3 bars.
Here is the explanation of how this indicator works. When there is a flat market, all three lines are close together. When the trend becomes obvious, the lines go apart. It doesn’t matter what asset and on what time frame you trade, the trend is important. Consequently, the Alligator can help identify the best entry and exit points by showing the strength of the current trend.
How to set up Alligator?
It is pretty simple to set up the Alligator:
1. Click on the ‘Indicators’ button in the left bottom corner of the screen and go to the ‘Popular’ tab.
2. Select ‘Alligator’ from the list of indicators.
3. Press ‘Apply’ without changing the settings.
Now you can use the indicator. If you are a novice trader it is better to leave default settings, but if you are a professional trader, you can can change settings and increase or decrease the time period and the shift for the better accuracy and this is the another way how you can decrease the number of false alarms.
How to use in trading Alligator?
There are some ways how you can use the Alligator. Perhaps you already know that, it might help you identify the strength of the prevailing trend. You have to remember that when you trade, not only the direction important, but also strength and it can be really crucial specifically on shorter time intervals. If the distance between the jaw, the teeth and the lips of the Alligator becomes bigger, the trend is becoming stronger. And conversely if the lines cross with each other, the trend is most likely losing its strength.
However, this is no the only way how you can use the Alligator indicator in your trading. The Alligator can spot trend reversal points. For an upward trend, the lips will be placed above the two other lines, but there have to be the intersection of the teeth and the jaw lines . For a downward trend, the lips will be placed below the two other lines and there have to be the intersection of the teeth and the jaws as well.
In order to get better results you can the Alligator with any oscillator-type indicator (Awesome, Stochastic etc.). Keep in mind that the Alligator and any other good indicators are not able to forecast the future with 100% accuracy.
Conclusion about Alligator
It is simple to try the Alligator but it is difficult to understand it perfectly, so beware not to be fooled by this tool. Moreover, remember that all indicators can give false results sometimes even if they adjusted and used correctly. Remember to check the signals received on various indicators and from different timeframes.