The alligator indicator consists of three displaced moving averages. They are called the alligator jaws, (blue line), teeth, red line and lips, green line. The jaws is 13 period moving average displaced by 8 bars forward, teeth is 8 period moving average displaced by 5 bars and lips is 5 period moving average displaced by 3 bars.
The alligator is a metaphor. When the three moving averages are entwined, the alligator is sleeping. This indicates a flat market. A trend begins when the alligator wakes up, that is, when the moving averages moves away, or widens. The green line moves fast followed by the red line and finally the blue line. This is the beginning of a trend. Better trades can be opened when a trend is identified.
Open buy position when the alligator lines start widening and trend direction is bullish. Open short positions when trend direction is bearish and alligator lines begin widening.
Normally the alligator indicator uses the default periods and displacements. However the indicator can be customized through the parameters located at the top of the script. To modify parameters, open the script in VTL editor by double clicking on the indicator name in Navigator and change the parameter values. The parameters are marked separately in the VTL script and properly commented.
Alligator.zip (2.38 KB)