IQ Option strategy combination of the Alligator Indicator technical analysis and Fractal

Alligator & Fractals Technical Analysis Tools

This post is dedicated to probably the most powerful combinations of technical analysis tools. The Alligator and also the Fractals used together possess a potential of providing strong and highly accurate forecasts. The indicators could be applied to any asset as well as on any time frame.

The Alligator is really a technical analysis tool consisting of three lines overlaid on the pricing chart. The lines represent the jaw, the teeth and also the lips from the named animal. The indicator is designed to find the trend and predict its future direction. 

The Alligator works best when combined by having an oscillator-type indicator. And also the Fractals seem to become perhaps one of the best choices. The Fractals are recurring patterns which will predict reversals among larger, more chaotic price movements.

Both tools were introduced by pioneer of market psychology and legendary trader Bill Williams in her 1995 book “New Trading Dimensions”. The most purpose of those indicators is showing the emerging market trends and figure out optimal entry and exit points. They could be applied to any time frame and asset.

How conduct the indicators work?

The Alligator indicator is really a mixture of three smoothed moving averages with periods of 5, eight and 13, that all Fibonacci numbers. Each one of the lines is shifted ahead for a particular period, that depends upon the short- or long-term orientation of the particular line.

1) The Alligator’s Jaw (red) is really a 13-period SMA, moved into the longer term by 8 bars ;

2) The Alligator’s Teeth (orange) is definitely an 8-period SMA, moved into the longer term by 5 bars ;

3) The Alligator’s Lips (yellow) is really a 5-period SMA, moved into the longer term by 3 bars.

The listed analogy is designed to explain the way in which the indicator works. Sideways trends are marked using the alligator’s closed mouth — all of the three lines approach one another and occasionally intersect. Once the alligator is sleeping, the majority of careful traders avoid making new deals. The longer the Alligator waits, the hungrier it gets. Long periods of sideways trends are interspersed with strong bullish/bearish periods, and also the Alligator is good at catching these moments.

Also learn:

• IQ Option candlestick analysis
• IQ Option candlestick pattern

When the tendancy takes shape, the beast opens its mouth and the fundamental lines move farther apart. The stronger the tendancy, the wider the alligator’s mouth will open. Once the beast is sated it returns to the resting state, the lines become horizontal and concentrate inside a narrow corridor.

Fractals

The Fractals are designed to identify emerging trends and warn the traders of upcoming investing opportunities. The Fractals are available two different forms :

1. A bearish turning point occurs when there's a pattern with the very best high in the center and two lower highs on each side.

2. A bullish turning point occurs when there's a pattern with the bottom low in the center and two higher lows on each side.

Establishing the indicators

Establishing the indicators inside the IQ Option trading platform is straightforward.

To activate the Alligator indicator, click the “Indicators” button inside the lower left corner from the screen. Then choose “Alligator” coming from the collection of possible indicators.

Click the “Apply” button without changing the settings. The Alligator graph will then be overlaid on the value chart.

To activate the Fractals indicator, click the “Indicators” button inside the lower left corner from the screen. Then choose “Fractals” coming from the collection of possible indicators.

Click the “Apply” button without changing the settings. The Fractals will then be overlaid on the value chart.

How to use in trading?

Though each one of the indicators can be utilized separately, the Fractals and also the Alligator, as noticed from the Bill Williams himself, work best when used simultaneously to confirm each other’s signals. Generally, all buy signals provided from the Fractals indicator ought to be considered valid if perhaps below the Alligator’s central line (orange). Similarly, all sell signals ought to be above the Alligator’s central line (orange) in an effort to be valid.

The Alligator and also the Fractals, when used together, able to do to your house providing accurate sell/buy signals

Items to consider

1. Being the tendancy following indicators, the Alligator and also the Fractals are lagging behind the particular market.

2. It is feasible to boost the accuracy of both indicators by increasing the period. The amount of generated signals will, however, decrease.

3. Signals ought to be checked on seperate time frames for maximum predictive potential.

4. The Alligator and also the Fractals work best when used simultaneously. Using only perhaps one of the above signals could be risky.Source: www.iqtrick.com

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