Trading in Forex market presupposes high risks which not all traders can endure. Therefore, before starting to trade one should carefully consider his goals, investing abilities and the risks he might face. Undeniably, every novice trader makes mistakes, but in order to succeed in trading, it is very important to get acquainted with the trading environment. Moreover, traders should also develop their own trading strategies to be more disciplined and reach the best financial results. To develop an exact trading strategy, traders use a variety of techniques and tools such as charts or technical indicators to study the market. These tools aim to predict the future market movements, thus helping traders to better forecast the market. The Gator Oscillator is just one of these tools, which is of great help for traders.
Gator Oscillator: the basics
The Gator Oscillator, developed by Bill Williams, is one of the indicators of technical analysis, which is closely related to Williams Alligator and is used alongside with it. The Gator Oscillator shows the absolute degree of convergence/divergence of the Alligator’s three smoothed moving averages indicating the hunger or sleep periods of Alligator, i.e. trending or non-trending periods of price movement.
The Gator Oscillator is displayed as a histogram built on either side of the zero line. The bars above zero show the absolute difference between the blue and red lines of Williams Alligator (jaw and teeth: moving averages with periods of 13 and 8), whereas the bars below zero show the absolute difference between the red and green lines of Williams Alligator Indicator (teeth and lips: moving averages with periods of 8 and 5).
The Gator Oscillator histogram is made up of green and red bars. The green bar shows up when its value exceeds the value of the previous bar, and the red bar, on the contrary, shows up when its value falls behind the value of the previous bar.
How to use Gator Oscillator
As was mentioned above, the Gator Oscillator is a supplement to Bill Williams Alligator indicator and it helps to better imagine the forthcoming changes in trends, i.e. when Alligator awakes, eats, fills out and sleeps. Respectively, the Alligator’s activity is divided into the following 4 periods:
- The Gator awakes when the bars on either side of the zero line have different colors: red or green;
- The Gator eats when the bars on both sides of the zero line are colored green;
- The Gator fills out when one of the bars either above or below the zero line turns red after the “eating” phase;
- The Gator sleeps when the bars on both sides of the zero line are colored red.
Basically, the Gator Oscillator, as well as many other trading indicators have great importance in showing traders how to carefully examine and forecast the future market movements in order to become a more experienced and successful trader.