Gator Oscillator
Technical Indicator
Gator Oscillator

The family of indicators developed by Bill Williams includes Gator Oscillator. The indicator aims to show when the market is trending and it’s in range. The Gator is derived from the Alligator Indicator. It is shown in a separate window below the price chart.

Alligator and Gator work together well. The Gator Oscillator helps to recognize and confirm the information from the Alligator Indicator. In order to use the Gator Oscillator to its full ability, we recommend you to read the information about the Alligator Indicator first.

Williams aimed to simplify analysis. With Gator there’s no need to analyze the distance and divergence between the indicator lines: it’s done automatically. The Gator Oscillator is in the form of a dual histogram with bars above and below the zero line at the same time. The positive values come from the absolute difference between the Alligator’s jaws and teeth (13- and 8-period SMAs), while the negative ones represent the absolute difference between teeth and lips (8- and 5-period SMAs) and then given a negative value. A bar in the histogram is painted green if it is bigger than the previous one and red if it’s smaller.

What is the Gator Oscillator?

The Gator oscillator is a forex trading tool developed by Bill Williams. It is closely related to the similar Alligator oscillator. As a trend indicator itd is most useful in markets that display strong directional action.

This is a supplement to the Alligator indicator. This indicator shows the absolute degree of convergence-divergence of the Alligator’s three short moving averages. This is pointing towards the Alligator’s periods of slumber and awakeness in the trending and non-trending market phases. It also identifies trend changes in securities prices. The main difference between the Gator Oscillator and the Alligator Indicator is that the former uses a histogram while the later uses moving averages.

On this chart, the upper section shows the price action, while the lower part is the Gator indicator. The smoothed moving averages that create the value of the bars are not depicted on the graph. As you can see, each bar of the indicator is comprised of a lower and an upper section the interaction of which determines the way the indicator is interpreted.

The indicator is calculated according to the following formulae.

Median Price = (High + Low)/2 Jaw (lower moving average) = Smoothed moving average of the median price over 13-period

Teeth (upper moving average) = Smoothed moving average of median over 8-period

Lips (middle moving average) = Smoothed moving Average of the median over 5-period

These values, called balance lines, are calculated and shifted into the future by an amount specified by the trader. If the moving averages themselves are depicted on the charts, the jaw will be blue, the teeth will be in red, and the lips will be green most of the
time. In our graph, the smoothed moving averages (i.e. balance lines) are not shown.

The bars seen below the centerline in the chart above show the absolute difference between the red line and the green line with a minus sign. The upper bars, on the other hand, depict the difference between the blue and the red lines. More concisely.

Top bar = Jaw – Teeth

Bottom bar = – (Absolute value of (Teeth – Lips))

The indicators is then evaluated on the basis of the emerging green or red patterns.

Gator Oscillator trading strategy

To add the Gator Oscillator to your chart in Metatrader, click “Insert”, choose “Indicators”, “Bill Williams” and then “Gator Oscillator”. You have the ability to change the parameters for jaws, teeth, and lips. The default settings are those that were recommended by Bill Williams and they are perfectly fine for a start. If you want to try other settings, you can also test them.

Like the Alligator that opens its mouth and tries to eat the price, the Gator behaves like a living creature. It has 4 states:

1. It sleeps – Both bars are red. It means that there’s no trend in the market. This corresponds to the time when the lines of the Alligator Indicator are intertwined. Bill Williams recommends staying out of the market during this time.

2. It awakes – After sleeping, one bar is green and one bar is red. A trend forms. It’s time to look for the opportunities to enter the market.

3. It eats – Both bars are green. The trend continues. Keep your trade open and let your profit increase.

4. It is sated and fills out – After eating, one of the bars is red. It’s a sign that the trend may be approaching its end, so think about taking profit.

How to Use Gator Oscillator

Being an oscillator in the form of two histograms built on either side of the naught line, the Gator Oscillator plots the absolute difference between the Alligator’s Jaw and Teeth (blue and red lines) in the positive area and the absolute difference between the Alligator’s Teeth and Lips (red and green lines) in the negative area. The histogram’s bars are colored green if exceeding the previous bar’s volume or red if falling short.

The bars of the extreme values are in tune with the strong trend forces.

The Alligator’s activity periods are divided into the following four:

1. Gator awakes
The bars on different sides of the naught line are colored differently.

2. Gator eats
Green bars on both sides of the naught line.

3. Gator fills out
Single red bar during the “eating” phase.

4. Gator sleeps
The bars on both sides are red.

As with the Alligator oscillator, the Gator also has four different stages of everyday life.

– When the bars on both sides of the naught line are red, the Gator is in the sleeping phase.

– When one of the sides becomes green, while the other is still red (both become differently colored), the Gator is said to be awakening.

– When both sides become green, thus the absolute difference between the two sets of moving averages grows, the Gator is in its eating phase.

– After the eating phase, when one of the two sides changes color, the Gator is known to be sated, which marks a deceleration in the trend and generally precedes a trend reversal or entering a trading range.

– The cycle is completed when both sides of the naught line turn red, signifying that the Gator has fallen asleep once again.

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