Oscillators like the alligator oscillator can be utilized in a wide range of applications in the process of trading. With these indicators, you can easily identify trending and ranging markets. Also, if you will set a definite time frame, you can readily see that even smaller trends can be derived out of the bigger trends that are generated by oscillators. In order to effectively use the oscillator for any trading purposes that you intend, it is essential to use your experience and creativity. Without these, any oscillator can barely make any difference.
In order to make sure that the oscillator will work well for you and your intended purposes, it is highly recommended for you to do a series of indicative back testing. You can use a demo trading account in order to do your back testing. For example, you want to see if the alligator oscillator will fit into your trading strategy, you can use a demo trading account to check if this is a feasible option without worrying about risking investment of any size. You can do this process for any oscillator that you want to test. In the long run, you can pick the best oscillators that will help define your strategy as a trader.
You probably have heard about the alligator oscillator. This oscillator is crated based on the assumption that each coming trend as well as the mini-trends derived from each is made up of different waves that may overlap with the beginning, growth, peak, and termination. This is in line with the principles being communicated by the wave theory created by Elliot. The alligator is very much the same as the gator oscillator. If a full understanding of the alligator indicator is desired, one should identify its four different phases:
- The Alligator Waking: This happens when the black or the green line falls below or above the blue line. Simply put, it happens when the alligator’s teeth go below or rise above the jaw. This occurs after a timeframe of contraction. This is analogized to the waking up of an alligator because it is the trend’s starting phase.
- The Alligator Eating: This is the phase or period wherein a derivative trend or mini-trend is well established. The alligator’s teeth are seen to be breaching through its lips. It is compared to an eating alligator simply because it is presumed that the trend is about to reach or achieve the climax.
- The Alligator Sated: Here, you can see the alligator’s teeth going back right below the line that is colored blue. Also, all three lines seem to create a smaller angle and contract to a much smaller area. Here, the effect of the price to the trend diminishes and the trend is said to have run its course.
- The Alligator Sleeping: This is the point where in the lines that represent the moving averages converge. In a more interesting presentation, it can be said that the alligator begins to close its mouth with the lips, jaw, and teeth coming together to a single point. This signals that the trend and all the mini-trends that comes with it has finally reached a point wherein it has exhausted itself. For the trader, this is the period to reflect on the strategies that were employed.
Indeed, the alligator oscillator is one of the most interesting indicators because of the colorful language that comes with it. In terms of reliability, this is also said to be worth the trust. So any beginning trader should devote some time studying this type of oscillator.