What it is
Bill Williams built the Alligator to show whether the market is trending or not. The three lines are averages of different speeds, pushed forward on the chart so they act as a delayed balance line. In a range they lie on top of each other. When a trend starts, the fast lips peel away first, then the teeth, then the jaw.
The picture of a sleeping alligator waking up and eating is a memory aid: wait while it sleeps, trade while it eats, and get out when it is full and the lines come back together.
How it is calculated
1. Midpoint of each candle = (high + low) divided by 2. 2. Jaw = a 13 period smoothed moving average (SMMA, the same smoothing Wilder used) of the midpoint, shifted 8 candles to the right. 3. Teeth = an 8 period SMMA of the midpoint, shifted 5 candles to the right. 4. Lips = a 5 period SMMA of the midpoint, shifted 3 candles to the right. 5. Bullish order is lips above teeth above jaw; bearish is the reverse.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Jaw | 13 | 2 to 100 | Length of the slowest line, the balance line for the bigger trend. |
| Teeth | 8 | 2 to 100 | Length of the middle line. |
| Lips | 5 | 2 to 100 | Length of the fastest line, the first to react to a new move. |
How to read it
How to trade it
- 1
On a 1 hour gold chart, wait for the lines to open up in bullish order after a period of tangling.
- 2
Buy on the first candle that closes above all three lines once they are in order, or on a pull-back to the lips.
- 3
Place the stop below the jaw, which is often 10 to 15 points below price on 1 hour gold.
- 4
Trail the stop under the teeth as the trend extends, and exit when a candle closes below the teeth.
- 5
On US30 apply the same in reverse for downtrends, and stay out entirely while the lines are tangled.
A trend trade on the Alligator is proved wrong when price closes back through the jaw, or the lines fold back into each other within a few candles of the entry.
WickSpeak runs in your browser with nothing to install. When you add the Alligator, it writes a plain-English reading on the live candle: what the indicator is, what it is doing right now, how to trade it and what would prove that reading wrong. It says whether the alligator is sleeping, waking or eating, which way it is facing, and where price sits against the three lines.
In Playbook, our no-code strategy builder, the Alligator can be a condition in a play. It can test whether the Alligator: flips long; flips short; is bullish; is bearish. Each condition can run on any of 12 timeframes from 1 minute to weekly, combined with up to 11 others, and the play can be backtested on past candles with your own costs and turned into alerts on screen, by email or by phone push.
Best markets and timeframes
Suits trending markets such as gold and US indices on 1 hour to daily charts. On very short timeframes it spends much of the time tangled.
Common mistakes
- Forgetting the lines are shifted forward, so they appear ahead of the latest candle by design.
- Taking trades while the lines are still intertwined.
- Exiting at the first touch of the lips instead of waiting for a close through the teeth or jaw.
Works well with
Questions traders ask
What are the default Alligator settings?
Jaw 13 shifted 8, teeth 8 shifted 5 and lips 5 shifted 3, all smoothed averages of the candle midpoint. WickSpeak lets you change the three lengths; the shifts stay as standard.
What does it mean when the Alligator is sleeping?
The three lines are twisted together, which means there is no clear trend. Williams advised staying out until the lines separate.
Why are the Alligator lines shifted forward?
Shifting pushes the lines ahead on the chart so price has to move decisively to cross them. It filters out small moves that would otherwise cause false signals.
What is the best timeframe for the Alligator?
It works on any timeframe but is most reliable on 1 hour and above, where trends last long enough for the lines to separate cleanly.