The Simple Gator Oscillator forex trading strategy is formulated in a manner that allows you trade any pair with clear trading rules.
The strategy uses 3 powerful technical indicators:
The Reducedlagma and DEMA indicator are trend seeking tools while the Gator Oscillator is a technical indicator that pinpoints strong directional price action.
Merge all these together and what we have in our hands is a powerful trading tool.
Chart Setup
MetaTrader4 Indicators: reducedlagma.ex4 (Inputs Variable Modified; MA_Period=60, MA_Sampling_Period=45), DEMA.ex4 (Inputs Variable Modified; PERIOD=28), Gator Oscillator.ex4
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day
Recommended Trading Sessions: Any (London, New York, Tokyo)
Currency Pairs: Any pair
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Buy Trade Example
Fig. 1.0
Strategy
Long Entry Rules
Enter a buy order if the following rules or conditions hold sway:
We begin by explaining the rules that oversee the Gator Oscillator –
Rule 1. Gator awakes – the bars on different sides of the signal line are colored differently.
Rule 2. Gator eats – green bars on both sides of the signal line.
Rule 3. Gator fills out – single red bar during the “eating” or “Rule 2.”
Rule 4. Gator sleeps – the bars on both sides are red.
- If the Gator Oscillator exhibits “Rule 2” i.e. the Gator eats, we can look out for bullish signal on the DEMA and reducedlagma.ex4 custom indicator as a confirmation to go long.
- If the red line of the reducedlagma.ex4 custom indicator intersects the magenta DEMA custom indicator line bottom up (refer to Fig. 1.0), a buy signal is said to be looming.
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:
- If the Gator sleeps (shown as Rule 4 on Fig. 1.0), it is an indication that the market is entering a non-trending state and as such an exit or take profit is imminent.
- If the red line of the reducedlagma.ex4 custom indicator intersects the magenta DEMA custom indicator line top downward as shown on Fig. 1.0, an exit or take profit will suffice.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the Gator Oscillator exhibits “Rule 2” i.e. the Gator eats, we should look out for signs of a downward push on the DEMA and reducedlagma.ex4 custom indicator as a validation to go short.
- If the red line of the reducedlagma.ex4 custom indicator intersects the magenta DEMA custom indicator line top downward as seen on Fig. 1.1, a sell signal is said to be on the horizon.
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:
- If the Gator sleeps (shown as Rule 4 on Fig. 1.1), it is an indication that the market is entering a non-trending state and as such an exit or take profit is recommended.
- If the red line of the reducedlagma.ex4 custom indicator intersects the magenta DEMA custom indicator line bottom up as depicted on Fig. 1.1, an exit or take profit will do.
Sell Trade Example
Fig. 1.1
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About The Trading Indicators
The Gator Oscillator is a technical trading tool by Bill Williams and shares a lot of similarity to the Alligator oscillator.
The indicator is basically use to spot strong directional action.
The Double Exponential Moving Average (DEMA) was designed by Patrick Mulloy as a tool to better respond to changes in the market than the usual moving averages.
The computation of the DEMA is built around a single exponential moving average and a double EMA.
The reducedlagma.ex4 custom indicator is an advanced moving average indicator that eliminates lag, thereby reacting faster to changes in price.