Triple III Explainer

The indicator analyses the relationship between these three lines. Where the lines move closer, the concept is that this indicates the alligator is sleeping and the market is consolidating. At this point, the trader would either hold onto the trades and wait for the market trend to become stronger or trade against the current trend with an expectation of trade reversal.

Who is Bill Williams Trader?

Since then, fractals have gained the most popularity as an indicator within the MetaTrader 4 trading terminal. The Alligator indicator uses three smoothed moving averages, set at five, eight, and 13 periods, which are all Fibonacci numbers. The initial smoothed average is calculated with an SMA, adding smoothed averages that slow down indicator turns. Bill Williams contributions to technical analysis cannot be underestimated. He created some useful indicators that have been used for decades. The Fractals is one of the least known of all indicators that he created.

One of its advantages is that it is relatively simple to identify on a chart. Look for a sequence of five candles on your price chart to find it. Have you ever wondered about the people behind some of the most effective trading tools and strategies? Because while the majority simply follows in the footsteps, someone paves the road. Bill Williams trader, author and psychologist was one of the market experts who managed to see patterns in the seemingly chaotic price movement and turned them to his benefit. Today we are talking about the idea of trading chaos by Bill Williams.

Triple Exponential Moving Average (TEMA): How to Use in Trading

The Bill Williams Accelerator Oscillator was created to identify early changes in the force of a move that a market or asset was making. Bill Williams had a psychology and engineering degree that helped him build a better understanding behind the behaviors of the market. Williams proposed that the financial and trading markets can never fully be known by anyone. In the 1990s Williams began to receive recognition because of his series of books on ‘chaos theory’. The Fractals indicator is provided by TradingView and other advanced trading platforms. Therefore, to use it there, you need to manually download it and add it to the trading platform.

• Williams calls chaos a higher form of order, governed not by cause and effect, but by randomness.
• Facts, on the contrary, are not numerous and are often less important for traders than opinions.
• Bill Williams Trader was an American investor who mastered technical analysis and trading psychology.
• Fractal trading, like any other trading strategy, has advantages and disadvantages.
• This confirms a bullish trend reversal and signals traders to enter buy orders or long trades.

Bullish and bearish line crossover strategy

He devoted his life to teaching others and developed a unique trading methodology. Bill’s daughter, Justine, carries on his legacy by teaching traders the Bill Williams methods and concepts. The Williams family is proud to have been a part of his life and legacy. A trader’s goal is to combine the knowledge of market structure with self-knowledge. In his opinion, it’s important to stop doubting oneself and simply enjoy trading.

The twin peaks strategy is used to confirm market trends and helps traders place trading orders in the direction of the ongoing trend. It also helps in measuring the strength of the existing trends and identifying if the market will continue in the same direction or reverse. In this strategy, when the first Bill williams trader peak is formed, traders should wait for the second peak to form, which should be a little smaller than the first peak.

And this is very strange, as facts have an impact on all market participants. Williams says most traders lose because they follow other people’s opinions and ignore obvious facts. When you understand how any market works and its purposes you can refute some basic principles of fundamental analysis.

• His theories and indicators are widely used in the stock market today.
• The three lines stretched apart and moving higher or lower denote trending periods in which long or short positions should be maintained and managed.
• Bill Williams’ alligator indicator provides a useful visual tool for trend recognition and trade entry timing, but it has limited usefulness during choppy and trendless periods.

Forex and girls

It signals that when the bar was opening, bulls dominated the market, but they gave the way to bears by its close. Note that, during the entire downtrend, bars close below the Alligator lips (green line). When the bear trend is exhausting, the price chart breaks through the lips upside. Now that you have understood how to identify and calculate a fractal on the chart, let us observe how to trade it profitably. It is noteworthy that there are various ways to trade this pattern, but the following are the most effective trading strategies.

He was a forefather of modern-day trading psychology

The red line is the same, but shifted three bars to the right. Despite his success in the trading competition, the market soon showed its unpredictable side. Like many traders who experienced initial success, he found that maintaining profitability over time was challenging. Some commonly used indicators paired with the Williams Alligator include the relative strength indicator, the MACD, the average directional index, the stochastic oscillator, and pivot points. Bill Williams indicators help in a comprehensive analysis of the forex market by combining two or more technical indicators together. It provides early warning signals, identifies market reversals and confirms market continuation trends.

Differently put, it shows where the market would be if there were no new incoming information. So, the distance between this line and the current price is an indication of how the traders interpret this new incoming information. First of all, Williams states there is no such thing as bullish/bearish consensus.

In the opposite scenario, when the market facilitation index is pointing down, but the volume rises it indicates a battle between bulls and bears, with their forces nearly equal. On the chart it looks a lot like a range-bound market, which we already know usually breaks out in a rapid and powerful motion in the opposite direction. It is crucial to spot the exact direction of the breakout in order to build a successful strategy for your upcoming moves. So, just before you dive into the vast ocean of highly complex Forex trading strategies, start simple and figure out the most comfortable way for you to fit into the world of currency trading.