Composite & famousAlligator
Bill Williams' three smoothed, offset averages that tell trend from range at a glance.
Works in most conditionsEngine-computed on a fixed sample series
What it is
The Alligator, created by Bill Williams, is a trend-identification tool made of three smoothed, forward-shifted moving averages that together tell you at a glance whether a market is trending or merely drifting sideways. Williams wrapped the tool in a memorable metaphor: the three lines are the alligator's jaw, teeth and lips, and the beast either sleeps (lines tangled together, no trend) or wakes up hungry to feed (lines fanning apart, a trend running). The question it answers is the most important one a trend trader faces — is there a trend here worth trading at all, and if so, in which direction? Because sitting out flat markets is half the battle, the Alligator is as much a filter for when not to trade as a signal for when to.
How it's calculated
The three lines are smoothed moving averages (SMMA) of the median price, (High + Low) / 2, with different lengths and different forward shifts. The Jaw (traditionally the blue line) is a 13-period SMMA displaced 8 bars into the future; the Teeth (red) is an 8-period SMMA displaced 5 bars forward; and the Lips (green) is a 5-period SMMA displaced 3 bars forward. The smoothed averaging makes each line steadier than a simple moving average of the same length, and the forward displacement staggers them in time so that in a trend they line up in a clean, fanned order. When the three averages are close together their values nearly coincide and the lines braid; when price trends they separate by length, fastest to slowest. The displacement is what gives the Alligator its characteristic look and its slight built-in lag.
Reading it, step by step
When the three lines are intertwined and running flat, the alligator is asleep — the market is ranging and directionless, and the tool's message is to stand aside. When the lines separate and fan out in order, they signal an awake, feeding alligator and a trend to trade: for an uptrend the Lips (fastest) sit on top, the Teeth in the middle, and the Jaw (slowest) on the bottom, with the reverse stacking for a downtrend. The wider and more ordered the fan, the stronger and more established the trend. As the trend matures, price rides above the Lips in an uptrend; a pullback into the Teeth is normal, while a close that re-tangles the lines warns the move is ending. The re-braiding of the three lines is the visual cue that the alligator is going back to sleep and the trend is over.
Best timeframes and settings
The default 13/8/5 lengths with 8/5/3 forward shifts are Bill Williams' calibrated values and are rarely altered, since the whole Williams method assumes them. The Alligator works across all timeframes — scalpers use it on 1- and 5-minute charts, swing traders on the 4-hour and daily — because the sleeping-versus-feeding logic is scale-independent. Its displacement and smoothing mean it lags, so on very fast charts the lines can re-tangle before a scalp completes; higher timeframes give cleaner, more tradable fans at the cost of later signals. Traders who find it too slow generally drop a timeframe rather than shorten the periods, preserving the tuned relationships between the three lines. The responsiveness-versus-noise trade-off is therefore managed by timeframe selection, not by re-parameterizing.
When and where to use it
The Alligator is a trend filter, so it shines in markets prone to sustained directional moves and is designed to keep you out of the ones that chop. It applies to any liquid instrument — equities, futures, forex, crypto — and its logic does not depend on volume, so it works even where volume data is poor. Use it to answer the go/no-go question before deploying trend-following tools, and to define the direction those tools should take. Avoid trading it in a market that is clearly ranging, because that is exactly the sleeping state it is warning you about; forcing trades then produces a string of false starts. It is at its most valuable at the transition from a long consolidation into a new trend, when the lines finally separate after a period of braiding.
Strategies that use it
The core strategy is trend participation: wait for the three lines to separate and align in order, enter in the fan's direction on the first pullback toward the Lips or Teeth, and hold while the fan stays open, treating a re-tangling of the lines as the exit. A breakout variant enters when price breaks out of a consolidation at the same moment the lines begin to fan, using the mouth opening as confirmation that the breakout has trend behind it. A full Williams-system approach layers the Alligator with the Awesome and Accelerator oscillators: the Alligator says a trend exists and its direction, and the two oscillators time the entries within it. Across all of these, the trailing exit is the Teeth line or the re-braiding of the fan.
Combining it with other indicators
The Alligator was built to work with the rest of Bill Williams' toolkit — the Awesome Oscillator, the Accelerator Oscillator and the Gator Oscillator, the last of which explicitly plots the spread between the Alligator's lines to show sleeping versus feeding as histograms. Outside that family, ADX is a strong complement because it quantifies with a single number the trend strength the Alligator shows visually; an ADX above 25 corroborates a fanned alligator. Momentum tools like MACD confirm the direction the fan points. Using the Alligator as a regime filter on top of an entry system — only taking longs when the fan is bullish — is a common way to combine it, letting it veto trades taken against the prevailing trend.
Where it fails
The Alligator's built-in lag is its main weakness: because it is made of displaced, smoothed averages, it confirms a trend only after the trend is already underway and it gives back part of the move when the trend ends and the lines finally re-tangle. Its most punishing environment is a persistently choppy market, where the lines braid, separate briefly, and braid again, generating repeated false starts and death by a thousand small losses. Traders who try to anticipate the fan before the lines actually separate get faked out; the tool works only once separation is real. It also gives no price target — it tells you a trend exists but not how far it will run. The defenses are patience (wait for clear separation), a ranging filter to avoid trading in chop, and accepting the lag as the cost of staying on the right side of big trends.
A worked example
Picture an index that has chopped in a tight band for three weeks; on the chart the Alligator's Jaw, Teeth and Lips are woven together and nearly flat — the beast is asleep and a disciplined trader holds fire. Then a strong session pushes price up and out of the range, and over the next two bars the green Lips curl above the red Teeth, which rise above the blue Jaw, the three fanning open in bullish order. The trader enters long on a shallow pullback to the Lips at 4,510, reasoning the alligator has woken and is feeding to the upside. Price trends to 4,650 over the following two weeks while the fan stays open and pullbacks hold above the Teeth. When price finally closes back down through the Teeth and the lines begin to knit together again near 4,620, the trader exits, having captured the bulk of the trend and sidestepped the preceding three weeks of chop.