The alligator is:
•An integrated approach to monitoring the market's momentum
•A simple indicator to trade only with the current trend
•A protection device to not lose money during a nontrending market
•An advanced indicator to signal the end of a current trend.
The Alligator helps traders get into the market on a real trend and stay out during the range-bound trading which eats away at profits.
The Alligator is a combination of Balance Lines, using fractal geometry and non-linear dynamics. The blue line (Alligator's jaw) on the chart is the Balance Line for the time frame displayed. The red line (Alligator's teeth) is the Balance Line for one significant time frame later than what is shown on the chart. The green line (Alligator's lips) is the Balance Line for the second significant time frame later.
The Alligator's lips, teeth and jaw show the interaction of the various time frames. Since markets trend only about 20 % of the time, traders want to go with the trends, staying out of range bound markets, as represented by the intertwining of the three lines.
Alligator Parameters