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Alligator Trading Basics

Winning strategy for traders

Course AT150

Getting Started

• Introduction
• Alligator Lines
• Pivot Levels
• Trading Methods

Introduction

1. The Alligator Strategy
   1. Created by Bill Williams (profitunity.com)
   2. Technical Trends has built on the basic idea
   3. Our software has the full strategy, adapted & modified
2. Useful for
   1. Day traders, Short term traders & Position traders
   2. Our version applies to trends, corrections & V revresals

Alligator Lines

• The Alligator has three lines
• Green, Red & Blue
• These lines are specially calculated indicators
• The lines are overlayed over a price chart
• Patterns are formed by interaction of Alligator with Prices
• Specific patterns give trading signals

Trend

• A clear trend is available when Alligator lines are in proper order.
• In an uptrend:
• Green is at top, Red in middle & Blue is the lowest
• In a downtrend:
• Blue is at top, Red in middle & Green is the lowest
• In a sideways market, the lines are mixed up.

Pivot Levels

• Significant highs & lows
• In an uptrend, breakout above Pivot high is a buy signal
• In a downtrend, breakdown below Pivot low is a sell signal
• When Alligator is sleeping, both, buy & sell signals come

Trading Methods

Method 1: Sleeping Alligator

• Alligator lines are intertwined
• Trend Continues:
• Alligator sleeps for few bars after New Highs/Lows
• Trend Reverses:
• Alligator sleeps in distribution / accumulation
• After some whipsaws, a new trend emerges

Method 2: Slow Reversal

• Often, reversal in trend comes by:
• Slow change from the original trend to the new trend
• The the three Alligator lines change direction without going through a process of 'sleeping'
• An entry signal comes when the strategy detects a V reversal.

Method 3: Reentry from Range

• Strongly trending market
• Prices go sideways for a few bars
• Alligator lines remain properly aligned
• Usually touch Red ot Green lines
• Probably a correction - low risk entry

Method 4: Reentry from Pivot

• Strongly trending market
• Small sideways consolidation
• Alligator may not be touching prices
• Pivot is available, nearby
• Pivot breakout / breakdown provides entry

Disciplined Trading

• Trend Mechanic is an online data,advisory & software service
• The Alligator strategy is available in Trend Mechanic
• A daily newsletter provides regular tips on using the Alligator
• Enhance your trading to the highest level with Trend Mechanic