"Most of the time the market remains stationary. Only for some
15–30% of time the market generates trends, and traders who are not
located in the exchange itself derive most of their profits from the
trends. My Grandfather used to repeat: "Even a blind chicken will find
its corns, if it is always fed at the same time". We call the trade on
the trend "a blind chicken market". It took us years, but we have
produced an indicator, that lets us always keep our powder dry until we
reach the blind chicken market"
In principle, Alligator Technical Indicator is a combination of Balance Lines (Moving Averages) that use fractal geometry and nonlinear dynamics.
The blue line (Alligator’s Jaw) is the Balance Line for the timeframe that was used to build the chart (13-period Smoothed Moving Average, moved into the future by 8 bars);
The red line (Alligator’s Teeth) is the Balance Line for the value timeframe of one level lower (8-period Smoothed Moving Average, moved by 5 bars into the future);
The green line (Alligator’s Lips) is the Balance Line for the value timeframe, one more level lower (5-period Smoothed Moving Average, moved by 3 bars into the future).
Lips, Teeth and Jaw of the Alligator show the interaction of different time periods. As clear trends
can be seen only 15 to 30 per cent of the time, it is essential to
follow them and refrain from working on markets that fluctuate only
within certain price periods.
When the Jaw, the Teeth and the Lips are closed or intertwined, it
means the Alligator is going to sleep or is asleep already. As it
sleeps, it gets hungrier and hungrier — the longer it will sleep,
the hungrier it will wake up. The first thing it does after it wakes up
is to open its mouth and yawn. Then the smell of food comes to its
nostrils: flesh of a bull or flesh of a bear, and the Alligator starts
to hunt it. Having eaten enough to feel quite full, the Alligator
starts to lose the interest to the food/price (Balance Lines join
together) — this is the time to fix the profit.
Full MQL4 source of Alligator is available in the Code Base: Alligator