Alligator Forex Trading Strategy

Having the right market timing and good entry/exit levels is the key to successful forex trading.

The Alligator Forex Trading Strategy is formulated to give traders the right market entry levels vis-à-vis suitable market timings on any timeframe.

Learn how this simple Alligator indicator based FX strategy works:

Chart Setup

MetaTrader4 Indicators: Alligator (Default Setting), hull-moving-average.ex4 (Inputs Variable Modified; period=36), 2line_MACD.ex4 (Default Setting)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets put on display:

  1. If the blue line of the Alligator MT4 indicator intersects its thinner lime and red lines bottom up, while also cutting across the thicker green line of the hull-moving-average custom indicator in the same manner as seen on Fig. 1.0, price is said to be pushed to the upside i.e. a trigger to buy the stipulated currency pair.
  2. If the blue line of the 2line_MACD custom indicator break above the 0.00 level as shown on Fig. 1.0, price is said to be pushed higher i.e. a trigger to buy the designated currency pair.

Stop Loss for Buy Entry: Place stop loss below short-term support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes precedence:

  1. If while a buy signal is ongoing, the blue line of the Alligator MT4 indicator intersects its lines (lime & red) and the thicker green line of the hull-moving-average custom indicator, an exit or take profit is recommended.
  2. If the blue line of the 2line_MACD custom indicator dips below the 0.00 level during a buy signal, it is a trigger to exit or take profit at once.

Sell Entry Rules

Enter a sell order if the following holds true:

  1. If the blue line of the Alligator MT4 indicator intersects its thinner lime and red lines top downward, while also cutting through the thicker green line of the hull-moving-average custom indicator in the same fashion as depicted on Fig. 1.1, price is said to be taken lower, hence a trigger to sell the designated forex pair.
  2. If the blue line of the 2line_MACD custom indicator break below the 0.00 level as illustrated on Fig. 1.1, price is said to be pressured lower i.e. a trigger to sell the specified currency pair.

Stop Loss for Sell Entry: Place stop loss above short-term resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If while a sell signal is running, the blue line of the Alligator MT4 indicator overlaps its lines (lime & red) and the thicker green line of the hull-moving-average custom indicator, an exit or take profit will suffice.
  2. If the blue line of the 2line_MACD custom indicator rises above the 0.00 level during a sell signal, it is a trigger to exit or take profit forthwith.

Sell Trade Example

Fig. 1.1

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The Alligator is an indicator by Bill Williams, introduced in 1995, the indicator is comprised of three lines that are overlaid on the activity chart.

The lines represent the jaw, the teeth and the lips of the Alligator.

Traders tend to use this indicator to gauge trend and its possible direction.

The Hull-Moving-Average is a popular trend following indicator that is designed on the moving averages with period 21.

It tries to remove lag altogether and succeeds in enhancing smoothing concurrently.

The 2line_MACD custom indicator is a popular forex indicator that is comprised of three vital components i.e. MACD 12-period exponential moving average (12 EMA), 26 period EMA MACD histogram and the MACD signal line (9-period exponential moving average of the MACD).

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