Binomo offers a wide range of educational materials, tutorials, and tools for everyone who wants to get familiar with the world of trading. In this article, we will describe one of the popular indicators that can be used in almost every Binomo trading strategy – Alligator.
What is an Alligator?
Alligator was developed by Bill Williams, a market psychology specialist. It’s a strategy based on the idea that financial markets and individual stocks only move 15% to 30% of the time, with the remaining time spent grinding in sideways ranges.
It works by using 3 Smoothed Moving Averages (SMMA). These 3 moving averages more accurately show changes in the dynamics of the asset’s price movement than one SMA (Simple Moving Average).
These three moving averages are made up of an alligator’s jaw, teeth, and lips, opening and closing in response to emerging trends and trading ranges:
- The jaw, represented by a blue line, starts at SMMA with13-bar and is smoothed by 8 bars on successive values.
- The Teeth are represented by the red line and start at SMMA with 8-bar to smoothen by 5.
- And the final line, colored green, is the lips. This line starts at SMMA with 5-bar and smoothens by 3-bars on subsequent values.
The mental picture of an Alligator eating, sleeping, or awakening makes the Alligator an excellent technical analysis tool. When the mouth of the Alligator is open and facing up, it signifies profit, while there is a loss when the Alligator’s mouth is closed and facing down. A sleeping alligator signifies a weak trend.
You can use the alligator indicator to set your price limits. On Binomo, you can set these two limits using the two dynamic indicators located above the chart. These lines change depending on the asset you are trading in.
The Alligator indicator is both momentum and confirmatory indicator, and it is capable of helping you to know the direction of the current market, when a trend has changed, and when to enter the market.
Best Timeframe
A time frame is a period during which the chart is formed. You can change the time frame by clicking on the icon in the lower-left corner of the chart.
The best entry point for short-term strategy is when there is an upward movement indicating a bull. To bring an additional income, the trading needs to be kept running during the bull till it hits a significant resistant level.
The Alligator indicator can be used on any timeframe. But the best time frame is considered to be a 5-minute chart reading which is effective for both short-term and long-term strategies.
The most common entry method here is using the trendline break. Just like in other strategies, it is a good idea to combine the Alligator with other signals to confirm your entry.
How do you master the Alligator indicator on Binomo?
Using the Alligator indicator on Binomo can have rewarding benefits. To set it up, you’ll need to follow those steps:
- Create a Binomo account if you don’t already have one.
- Click on trading tools located on the left side of your screen when logged in to the system.
- When the list appears, scroll down and click on Alligator. A popup will appear. This pop-up contains SMMA values: periods and offsets. Each SMMA has its setting. Beginners are advised to practice the settings so far to understand how the Alligator indicator works.
- Select the combination of colors that suits you and click apply.
- Now, you can start using your Alligator.
To see how the indicator works, traders can practice using a demo account. A Binomo demo account is a learning and training tool that is free, and traders are free to explore international markets without being concerned about financial losses.
Conclusion
The Alligator indicator is a handy visual tool used by traders to recognize a trend and determine the time to enter a trade. Although it has limited utility in choppy and trendless periods. This indicator can help traders improve their entry and exit points in a chaotic market.
Novice traders often search for a winning strategy on Binomo, trying to find the shortest way to become wealthy. The truth is that trading is not a game that can be won. The only way to be on top here is by learning and practicing.
Please remember that trading is always risky. There’s no strategy that you can lean on for 100%. To level up skills learn, read articles, and watch tutorials about trading on Binomo.
