How to Use the Alligator Indicator to Win in Expert Option.

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There is a variety of indicators available on the Expert Option trading platform.

They are all meant for use by the trader to better predict the markets they are trading.

The limitation a trader may experience is the lack of knowledge on how to correctly apply a technical indicator or any chart analysis too they may want to.

Among the many technical indicators available to traders on the Expert Option trading platform, the Alligator stands out.

It is the reason we thought that you should know exactly how to use it to win your trades in Expert Option.

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Master this and follow us for guides on other tools on the Expert Option trading platform in the future.

Let us begin by getting to understand the Alligator Indicator and then we shall see how you can use it to win more in Expert Option.

What is the Alligator Indicator?

 

The Alligator indicator is a trend technical analysis tool that uses three smoothed moving averages.

It will show you the direction of the general trend so that you can trade in that direction, increasing your chances of winning trades placed in the direction of the trend.

It also shows you possible trend reversals so that you can stop trading in the direction of the underlying trend and also catch a new trend as early as possible.

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Components of the Alligator Indicator.

The Alligator indicator is made up of three smoothed moving averages as we have mentioned.

The three moving averages bear names, each different from the other, and have different default settings on the Expert Option trading platform.

Below are the specifications of names and the various Expert Option default settings for each on the Expert Option trading platform:

Name of Moving Average Period Shift Color Width
Jaws 5 3 Red 1px
Teeth 13 8 Green 1px
Lip 13 5 Yellow 2px

Orientation of the Alligator Indicator on the Price Chart.

In any setting and uniquely for Expert Option, the three moving averages of the Alligator will arrange themselves such that the jaw (red line) is closest to the price.

It is then followed by the lip (yellow line) and then the teeth (green line), is the farthest from the price.

What that means is that if you spot the three lines arranged in descending order from the jaw to the teeth, then such is an uptrend.

The price will most probably be above all the lines with the jaw being closest and the teeth farthest in that order.

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Conversely, where the three lines arrange themselves in ascending order from the jaw to the teeth, then such is a downtrend.

The price will most probably be below all the lines with the jaw being closest and the teeth farthest in that order.

The aspect of reversal comes in where you spot the three lines changing from one order to another. This implies a change from one trend type to the other.

For example, there will be cases where the arrangement of the Alligator will change from the descending order of jaw to teeth with the price above all the lines, to the ascending order of jaw to teeth with the price below all the lines.

That is a change from an uptrend to a downtrend.

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On the other hand, you might also witness a change from the ascending order of jaw to teeth with the price below all the lines, to the descending order of jaw to teeth with the price above all the lines.

That is a change from a downtrend to an uptrend.

How to Use the Alligator Indicator to Win in Expert Option.

Now that you understand the Alligator indicator and partly how it works on the Expert Option trading platform, what you need to worry about next is how you can use it to win your trades in Expert Option.

What strategies can you employ using the indicator to reap huge returns while trading binary options in Expert Option?

It is the whole subject of this post, and so be sure that by the time you are done reading this post, your worries will all have been satisfactorily addressed.

Now, let us get going as concerns how to use the Alligator indicator to win in Expert Option.

Here are the various ways in which you can employ the Alligator indicator in your Expert Option trading to win more:

  • The Alligator Only Trading Strategy.
  • The Bollinger Bands – Alligator Trading Strategy.
  • The Parabolic SAR – Alligator Trading Strategy.
  • The RSI – Alligator Trading Strategy.
  • The Awesome Oscillator – Alligator Trading Strategy.
  • The MACD – Alligator Trading Strategy.
  1. The Alligator Only Trading Strategy.

Did you know that you can use the Alligator indicator alone to make trading decisions?

Though no indicator is enough to be used as a stand-alone indicator without the backing of other indicators or tools, the ‘Alligator only trading strategy’ is the basic strategy using the tool.

So how is this strategy applied in Expert Option trading to win more?

It is a simple strategy that applies the basic concepts of the Alligator indicator which we have already covered while introducing the indicator.

Trading the Trend.

Basically, you will be best suited to place buy trades where the three moving averages are arranged in descending order of jaw, lip, and teeth with the price being above all the three lines, the jaw being closest to, and teeth being farthest from the price.

The three moving averages must be away from each other and almost parallel, as a sign of the strength of the uptrend, not coming close to each other so often.

Such a set-up defines an uptrend and trading with the trend is the best thing you can do to yourself because it increases the chances of winning the trades you take.

That way, you will win more and grow your Expert Option account faster.

A trader is also best suited to place sell trades where the three moving averages are arranged in ascending order of jaw, lip, and teeth with the price being below all the three lines, the jaw being closest to, and teeth being farthest from the price.

The three moving averages must be away from each other and almost parallel, as a sign of the strength of the downtrend, not coming close to each other so often.

Such a set-up defines a downtrend and trading with the trend is the best thing you can do to yourself.

It increases the chances of winning the trades you take, and so you will win more and grow your Expert Option account faster.

Trading Trend Reversals.

You can also use the Alligator indicator to spot trend reversals and stop placing trades in the direction of the underlying trend.

You can then wait till a new trend has been established in the direction of the reversal to begin placing trades in the direction of the new trend.

From Uptrend to Downtrend.

A change from an uptrend to a downtrend is implied where the arrangement of the Alligator changes from the descending order of jaw, lip, and teeth with the price above all the lines, to the ascending order of jaw, lip, and teeth with the price below all the lines.

First, you will begin to see the three moving averages coming close to one another as a sign of weakness of the uptrend.

If the uptrend is strong, we said that the lines must be away from each other and almost parallel, not coming close to one another so often.

Once you notice this, you would rather stop placing buy orders and wait.

The order of lines will then reverse within no time and the change of trend will be evident.

You can then begin placing sell orders once the downtrend has been established.

From Downtrend to Uptrend.

A change from a downtrend to an uptrend is implied where the arrangement of the Alligator changes from the ascending order of jaw, lip, and teeth with the price below all the lines, to the descending order of jaw, lip, and teeth with the price above all the lines.

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First, you will begin to see the three moving averages coming close to one another as a sign of weakness of the downtrend.

If the downtrend is strong, we said that the lines must be away from each other and almost parallel, not coming close to one another so often.

Once you notice this, you would rather stop placing sell orders and wait.

The order of lines will then reverse within no time and the change of trend will be evident.

You can then begin placing buy orders once the uptrend has been established.

  1. The Bollinger Bands – Alligator Trading Strategy.

This strategy employs the Bollinger Band breakout trading in combination with the Alligator indicator.

For that reason, you will spot Bollinger band breakouts which are accompanied by relevant Alligator indicator signals before you can trade in the direction of such breakouts.

Bollinger Band Breakout.

It is a combination of Bollinger bands and what price bars are doing which will confirm that it is indeed a breakout that the market is up to.

So how do you establish a breakout using the Bollinger bands technical indicator? It is simple.

Once price bars begin to push against the upper band line and not reversing downwards but continuing upwards, then such will most probably be an upward breakout.

On the contrary, if price bars begin to push against the lower band line and do not seem to reverse but continue downwards, then such will definitely be a downward breakout.

Scenarios like these will definitely be accompanied by an expansion or widening of the Bollinger band indicator bandwidth.

What else do you expect when the price is pushing against either the upper or lower band line sustainably in one direction?

What else, if not an expansion of the bandwidth which had been narrow?

It will exactly be so, as the standard deviation of the upper or lower band line from the middle line increases due to an increase in volatility upwards or downwards.

Before you can jump to conclusions though, first be sure that candlesticks pushing against the upper and lower band lines close beyond such lines.

That is to mean that for a successful upward breakout, candlesticks pushing against the upper band line must close above such a line.

However, for a successful downward breakout, candlesticks pushing against the lower band line must close below such a line.

Trading Bollinger Band Breakouts with the Alligator Indicator.

So how do you trade such breakouts shown by the Bollinger bands tool, incorporating the Alligator indicator?

It is very simple because you know that upward breakouts are a bullish signal while downward breakouts are a bearish signal.

You will use the Alligator indicator to confirm bullish and bearish breakout signals obtained from the Bollinger Bands indicator.

After a successful Bollinger Band upward breakout, check to confirm that the Alligator indicator is doing either of the following before entering buy trades:

  • The three moving averages are arranged in descending order of jaw, lip, and teeth. All this happens with the price being above all three lines. The jaw is closest to, and the teeth are farthest from the price.
  • The ascending order of jaw, lip, and teeth with the price below all the lines begins to change. It begins to change to the descending order of jaw, lip, and teeth with the price above all the lines.

 

On the contrary, after a successful Bollinger Band downward breakout, check to confirm that the Alligator indicator is doing either of the following before entering sell trades:

  • The three moving averages are arranged in ascending order of jaw, lip, and teeth. All this happens with the price being below all three lines. The jaw is closest to, and the teeth are farthest from the price.
  • The descending order of jaw, lip, and teeth, with the price above all the lines, begins to change.  It begins to change to the ascending order of jaw, lip, and teeth with the price below all the lines.
  1. The Parabolic SAR – Alligator Trading Strategy.

This strategy makes use of the Parabolic SAR in combination with the Alligator indicator to make better and more informed trading decisions.

You understand that a trading setup supported by more than one indicator stands a better chance of being correct in predicting the price direction.

The Parabolic SAR.

Parabolic SAR means parabolic Stop and Reverse.

It is a technical analysis tool that hints at the direction the price of an asset is moving.

It does so by showing potential reversal points of the price, where the current trend ceases and a new one begins to form.

The Parabolic SAR is represented by dots that correspond to each candlestick or price unit that forms. It is those dots that it uses to show potential price reversal points, but how?

Usually, whenever the Parabolic SAR dots are above the price of an asset, such price is on a downtrend. Conversely, whenever the Parabolic SAR dots are below the price, such price is on an uptrend.

The above is to mean that where the dots of the parabolic SAR were above the price of an asset but a new dot forms below the price, an uptrend has just begun.

On the contrary, where the dots were below the price but a new dot forms above the price, a downtrend has just begun.

So now, how do you use the Parabolic SAR indicator together with the Alligator indicator in a perfect symphony to win more in Expert Option?

It is quite simple, especially now that you understand the ins and outs of the Alligator indicator.

Parabolic SAR Bullish and Bearish Signals.

For the bullish signal, the Parabolic SAR dots will begin shifting from above to below the price.

Better still, the Parabolic SAR dots have been below the price for quite some time and are away from the price, and not drifting any close.

That is indicative of a strong uptrend which is not weakening any time soon.

The bearish signal is the opposite. The Parabolic SAR dots will begin shifting from below to above the price.

Better still, the Parabolic SAR dots have been above the price for quite some time and are away from the price, and not drifting any close.

That is indicative of a strong downtrend which is not weakening any time soon.

Once you have such a perfect bullish or bearish signal, then what you do next is to apply the next tool, which is the Alligator indicator.

The indicator is easy to use as we have established before, and as we shall confirm here.

Trading the Parabolic SAR with the Alligator Indicator.

You will use the Alligator indicator to confirm bullish and bearish signals obtained from the Parabolic SAR indicator.

After a perfect Parabolic SAR bullish signal has formed, check to confirm that the Alligator indicator is doing either of the following before entering buy trades:

  • The three moving averages are arranged in descending order of jaw, lip, and teeth. All this happens with the price being above all three lines. The jaw is closest to, and the teeth is farthest from the price.
  • The ascending order of jaw, lip, and teeth with the price below all the lines begins to change. It begins to change to the descending order of jaw, lip, and teeth with the price above all the lines.

On the contrary, after a perfect Parabolic SAR bearish signal has formed, check to confirm that the Alligator indicator is doing either of the following before entering sell trades:

  • The three moving averages are arranged in ascending order of jaw, lip, and teeth. All this happens with the price being below all three lines. The jaw is closest to, and the teeth are farthest from the price.
  • The descending order of jaw, lip, and teeth, with the price above all the lines, begins to change.  It begins to change to the ascending order of jaw, lip, and teeth with the price below all the lines.
  1. The RSI – Alligator Trading Strategy.

This manner of trading brings into play both the Expert Option Relative Strength Index (RSI) and the Alligator indicator for profitable trading.

Combining both an indicator and an oscillator must be one of the best ways to increase precision in the prediction of the market.

The RSI.

RSI trading stands for the Relative Strength Index (RSI).

The Relative Strength Index (RSI) is a versatile trading indicator that was designed by J. Welles Wilder.

It has been made available on the Expert Option trading platform, among other trading indicators and tools available on the platform.

The Relative Strength Index (RSI) on the Expert Option trading platform has two key levels. These are:

  • The red 70 levels.
  • The green 30 levels.

Besides the key levels, the Relative Strength Index (RSI) has a moving purple line that represents the price on the RSI oscillator.

It is the line that shows the current reading of the oscillator on the oscillator scale.

The only logical way a trader can make use of the RSI in Expert Option, given that a middle or zero line lacks, is by trading overbought and oversold conditions shown by the tool.

An overbought condition is one where the RSI line reads above the red 70 level while an oversold condition is one where the RSI reads below the green 30 levels.

RSI Bullish and Bearish Signals.

For the bullish signal, the Relative Strength Index (RSI) will be showing an oversold condition.

That will be by the RSI reading being below the green 30 level.

An oversold condition implies that the asset has been sold so much that the bears have exhausted their resources.

This gives the bulls an opportunity to exploit by driving the price up to the moon.

There is nothing else to see to establish a bullish signal, making it such a simple tool to use for this matter.

The bearish signal is the complete opposite.

The Relative Strength Index (RSI) will be showing an overbought condition.

That will be by the RSI reading being above the red 70 level.

An overbought condition means that the asset has been bought too much until the bulls have depleted their resources.

This leaves only the bears to exploit the opportunity by driving the price down to hell. Any other thing to establish a bearish signal in this regard?

Absolutely not, and so that will be it for the signals.

Once you have your signals, the next is for you to bring the next tool, the Alligator indicator, into the picture.

Let us find out how the Alligator comes into play in this setting.

Trading the RSI with the Alligator Indicator.

You will use the Alligator indicator to confirm bullish and bearish signals obtained from the Relative Strength Index (RSI) oscillator.

After a perfect Relative Strength Index (RSI) bullish signal has formed by way of an oversold condition, check to confirm that the Alligator indicator is doing either of the following before entering buy trades:

  • The three moving averages are arranged in descending order of jaw, lip, and teeth. All this happens with the price being above all three lines. The jaw is closest to, and the teeth are farthest from the price.
  • The ascending order of jaw, lip, and teeth with the price below all the lines begins to change. It begins to change to the descending order of jaw, lip, and teeth with the price above all the lines.

On the contrary, after a perfect Relative Strength Index (RSI) bearish signal has formed by way of an overbought condition, check to confirm that the Alligator indicator is doing either of the following before entering sell trades:

  • The three moving averages are arranged in an ascending order of jaw, lip, and teeth. All this happens with the price being below all three lines. The jaw is closest to, and the teeth is farthest from the price.
  • The descending order of jaw, lip, and teeth, with the price above all the lines, begins to change.  It begins to change to the ascending order of jaw, lip, and teeth with the price below all the lines.
  1. The Awesome Oscillator – Alligator Trading Strategy.

This technique employs the use of the Awesome Oscillator (AO) as well as the Alligator Indicator to pick higher probability entries.

You can see it is an indicator-oscillator affair which normally works better to predict the market with a bit more precision.

The Awesome Oscillator (AO).

The Awesome Oscillator is a technical indicator used to measure market momentum to get trend direction and possible reversal points.

It does so by calculating the difference between 5 period and 34-period moving averages which are calculated by using the midpoints of price bars rather than closing prices.

On the Expert Option trading platform, the indicator consists of a histogram oscillating about a zero line.

The Awesome Oscillator is simple to use, as we are about to establish.

Basically, when the Awesome Oscillator histogram has been reading above the zero line sustainably without shifting to below it, then the market is on an uptrend.

On the other hand, when the Awesome Oscillator histogram has been reading below the zero line sustainably without shifting to above it, then the market is on a downtrend.

Reversal points of an uptrend are hinted at if the Awesome Oscillator histogram reading shifts from above to below the zero line.

Reversal points of a downtrend are signaled by the Awesome Oscillator histogram reading shifting from below to above the zero line amid a downtrend.

When the Awesome Oscillator histogram shifts from below to above the zero line, the oscillator is signaling a change of price momentum from downward momentum to upward momentum.

On the contrary, when the Awesome Oscillator histogram shifts from above to below the zero line, the oscillator is signaling a change of price momentum from upward momentum to downward momentum.

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Awesome Oscillator Bullish and Bearish Signals.

The bullish signal will be pointed to, by the Awesome Oscillator showing an uptrend preceded by a change of price momentum from downward to upward.

The Awesome Oscillator histogram must have shifted from below to above the zero line.

Additionally, the Awesome Oscillator histogram must have been reading above the zero line sustainably without shifting to below it.

It is that simple to establish the bullish signal using the Awesome Oscillator.

On the other hand, the bearish signal is evident when the Awesome Oscillator shows a downtrend preceded by a change of price momentum from upward to downward.

The Awesome Oscillator histogram must have shifted from above to below the zero line.

Additionally, the Awesome Oscillator histogram must have been reading below the zero line sustainably without shifting to above it.

It is also that simple to establish the bearish signal using the Awesome Oscillator.

Trading the Awesome Oscillator with the Alligator Indicator.

You will use the Alligator indicator to confirm bullish and bearish signals obtained from the Awesome Oscillator.

After a perfect Awesome Oscillator (AO) bullish signal has formed, check to confirm that the Alligator indicator is doing either of the following before entering buy trades:

  • The three moving averages are arranged in descending order of jaw, lip, and teeth. All this happens with the price being above all three lines. The jaw is closest to, and the teeth is farthest from the price.
  • The ascending order of jaw, lip, and teeth with the price below all the lines begins to change. It begins to change to the descending order of jaw, lip, and teeth with the price above all the lines.

On the contrary, after a perfect Awesome Oscillator (AO) bearish signal has formed, check to confirm that the Alligator indicator is doing either of the following before entering sell trades:

  • The three moving averages are arranged in an ascending order of jaw, lip, and teeth. All this happens with the price being below all three lines. The jaw is closest to, and the teeth is farthest from the price.
  • The descending order of jaw, lip, and teeth, with the price above all the lines begins to change.  It begins to change to the ascending order of jaw, lip, and teeth with the price below all the lines.
  1. The MACD – Alligator Trading Strategy.

This strategy is one using the Moving Average Convergence and Divergence (MACD) and the Alligator indicator for profitable trading.

One tool is used to pick trading signals while the other is used to confirm such signals before entry.

The MACD.

MACD stands for Moving Average Convergence and Divergence (MACD).

It is a technical indicator with a wide variety of uses while trading.

The Expert Option trading platform has MACD as one of the tools available for use by traders, among the other chart analysis tools available on the platform.

The MACD on the Expert Option trading platform is made up of the following components:

  • A histogram oscillating about the zero line.
  • A fast-moving average oscillating about the zero line.
  • A slow-moving average oscillating about the zero line.
  • A zero line about which the other components oscillate.

Basically, when the fast-moving average is above the slow one, the two reading above the zero line with the histogram also reading above the zero line, the market is on an uptrend.

On the other hand, when the fast-moving average is below the slow one, the two reading below the zero line with the histogram also reading below the zero line, the market is on a downtrend.

Reversal points of the price are hinted at by change of price momentum as shown by the MACD.

A shift of the MACD components from above to below the zero line represents a change of price momentum from upwards to downwards.

On the contrary, a shift of MACD components from below to above the zero line represents a change of price momentum from downwards to upwards.

MACD Bullish and Bearish Signals.

The MACD bullish signal is shown by a change of price momentum from downwards to upwards, and a sustained momentum upwards.

MACD fast moving average must have crossed over to above the slow one. The two moving averages must have crossed over from below to above the zero line.

The MACD histogram must also have shifted from below to above the zero line. In brief, all the components of the MACD must remain above the zero line sustainably without shifting to below it.

On the other hand, the MACD bearish signal is shown by a change of price momentum from upwards to downwards, and a sustained momentum downwards.

The MACD fast-moving average must have crossed over to below the slow one. The two moving averages must have crossed over from above to below the zero line.

The MACD histogram must also have shifted from above to below the zero line. In brief, all the components of the MACD must remain below the zero line sustainably without shifting to above it.

It is that simple to establish the bullish and bearish signals using the MACD. Once a signal is ready, then you can confirm it using the Alligator indicator as we shall see below.

Trading the MACD with the Alligator Indicator.

You will use the Alligator indicator confirm bullish and bearish signals obtained from the Moving Average Convergence and Divergence (MACD).

After a perfect Moving Average Convergence and Divergence (MACD) bullish signal has formed, check to confirm that the Alligator indicator is doing either of the following before entering buy trades:

  • The three moving averages are arranged in descending order of jaw, lip, and teeth. All this happens with the price being above all three lines. The jaw is closest to, and the teeth is farthest from the price.
  • The ascending order of jaw, lip, and teeth with the price below all the lines begins to change. It begins to change to the descending order of jaw, lip, and teeth with the price above all the lines.

On the contrary, after a perfect Moving Average Convergence and Divergence (MACD) bearish signal has formed, check to confirm that the Alligator indicator is doing either of the following before entering sell trades:

  • The three moving averages are arranged in an ascending order of jaw, lip, and teeth. All this happens with the price being below all three lines. The jaw is closest to, and the teeth is farthest from the price.
  • The descending order of jaw, lip, and teeth, with the price above all the lines begins to change.  It begins to change to the ascending order of jaw, lip, and teeth with the price below all the lines.

Happy trading.

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