What is the Gator Oscillator?
Remember the Alligator indicator we discussed earlier on this platform?
Well, you can say the Gator indicator is its brother, LOL!
It is in fact its brother and probably one of the most celebrated oscillators in Olymp Trade.
Who Developed the Gator Oscillator?
You guessed that right; gator was developed by trader/chartist Bill Williams.
He is the same guy who created the Alligator indicator.
In fact, he designed the gator Oscillator to be used together with the Alligator indicator.
And going by their names, it’s very easy to confuse them for one and the same thing.
But, is gator really the same as alligator?
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While the Alligator indicator employs lines derived from moving averages, the Gator uses histogram.
That said, and to clear any doubts; I think it would be best to recap the Alligator for a better understanding of our topic. And probably to outline the major differences between the two.
Here goes: –
Calculating the Alligator Indicator balance lines.
This is the formula used to calculate the balance lines on the alligator indicator.
(High price point + low price point) /2 to get: –
- Alligator’s Jaw – plotted as the blue line on the chart. It is the 13-period SMA smoothed by 8 bars forward.
- Alligator’s teeth – drawn as a red line. 9-period SMA, smoothed by 5 bars forward.
- Alligator’s lips – 5-period SMA shifted 3 candles ahead.
These settings are not written on stone.
You can adjust them on the trading interface depending on your preferred trading strategy.
Otherwise, these are just default settings.
How is it calculated?
Calculating the gator indicator is actually simpler.
It uses the above balance lines (like of alligator indicator) to compute and derive values to be used to plot the dual histogram we mentioned.
It displays the histogram on both sides of the zero line.
Unlike the Alligator that displays lines on the price charts, the Gator plots dual histogram separately below the chart
Moving on, the positive values of the Gator oscillator are derived from the absolute difference between the Alligator’s jaw and teeth. Simply put, the difference between the blue and red line.
On the flip side, the negative values are coming from computing the difference between the teeth and lips (the red and green line). Finally, this is accorded a negative value to stay below the zero line.
Understanding the histogram on the gator indicator.
When the magnitude of a bar in the histogram is greater than the previous bar, it will be plotted as a green bar.
On the other hand, if the magnitude of the bar is lower than its predecessor, it is shown as a red bar.
Also, it is worth noting that the Gator’s bars are designed to help you easily recognize prevailing market states. Additionally, the Gator is here to confirm what the Alligator indicator already displays.
Before we dive into Gator trading strategies on Olymp Trade, we must first add the indicator to your trading chart.
Setting up Gator indicator on Olymp Trade
Like any other Olymp Trade indicator, you first have to login to your account, choose an asset, and pick preferred chart type.
- Locate the indicators feature and click on it.
- You will see a window with a list of indicators. Select Gator.
- Leave its settings on default.
That is how to add the Gator oscillator to Olymp Trade chart. As for the indicator’s parameters, you can adjust them once you gain some experience on using indicators. And depending on your preferred trading strategies.
Till then, stick with the default settings so you won’t mess up the signals.
Gator trading strategies on Olymp Trade.
As we have already mentioned, the Gator oscillator has some commonalities with Alligator indicator.
In fact, it is based on the assumption that the market trends, just like real life (Alli) gator, bases through a series of phases:
- Sleeping mode – meaning there is inactivity or less volatility in the market.
- Awakening/hunting – the market is rallying/forming.
- Eating – gaining momentum.
- Sated – the market is losing momentum.
Equally important, the green bars on the Gator histogram shows the prevailing trend is strengthening.
Conversely, the red bar is a signal of trend weakening.
As we have seen, the histogram appears beneath the price chart and is made up of green and red bars.
Here, each time period is represented by two bars, stacked on top of each other.
In some instances, the two bars are both green, sometimes both red, and in some cases, display both colors.
Let’s now discuss the four phases of the gator life as implied by the Gator oscillator on Olymp Trade.
The Gator oscillator Sleep Phase.
This is the phase where there is the absence of a trend in the market.
During this period, the Gator is displaying both bars as red.
As a trader, it isn’t wise to enter any trading position at such a period. Instead, wait until the market display some movements.
Gator awakening phase.
Here, the market is displaying some activities. A trend is forming.
Gator’s awakening phase follows the sleeping phase. You can determine this when the red bars turn green on the histogram.
Remember, it doesn’t matter whether the bar is above or below the zero line, as long as they are stacked together, that’s a complete awakening.
Gator Eating Phase
Once the Gator is up, it starts hunting for food.
In the market, this is when the trend is gathering momentum and testing resistance levels.
During such periods, the Gator should be showing both bars as green.
Gator sated phase.
After going on a hunting spree, the Gator will be exhausted and goes back to sleep.
This is shown when one of the green bars turns red. And again, it doesn’t matter where the bar is located with respect to the zero line.
With all these phases, when should you enter trading positions while using this tool in Olymp Trade?
Enter trades when the Gator is in the awakening phase.
When using the Gator oscillator to trade on Olymp Trade, consider opening a buy position when the Gator is in the awakening phase.
Hold the position through the eating phase.
And look for an exit strategy to bag your profits once in the sated phase because the trend is coming to an end.
Final thoughts on trading using Gator oscillator on Olymp Trade.
As you already know, the Gator indicator is based on moving averages and therefore, once in a while you may experience time lag between the price action and the oscillator shifting to the next phase.
Additionally, Gator oscillator only predicts whether the market is strong or weak.
It doesn’t tell you where the price is moving next.
With that in mind, it is advisable to combine the Gator oscillator with other indicators or better yet, come up with some guidelines to know where the trend is headed.
To this point, it is up to you now to either use the gator tool on your live or on the demo account. But the latter is preferred until you learn how to use this tool perfectly.
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