Bill Williams Indicators and Trading Strategies

30 May Bill Williams Indicators and Trading Strategies

The indicator measures the momentum of the last 5 bars and compares this value with the last 34 bars. That is, the indicator displays the current power of the impulse. In fact, the alligator is just 3 MA‘s (moving averages). Today we talk about a classical Profitunity strategy from the book of Bill Williams „Trading Chaos”.

It also identifies the action zones where traders should watch price action keenly. But in all fairness, it is not a comprehensive indicator, and it works best when combined with the Alligator indicator. Bill Williams outlined specific conditions that must be met when combining the two indicators. To place a buy order, a buy fractal must appear above the alligator’s teeth (red line).

Which forex pairs move the most?

In the 1990s Williams began to receive recognition because of his series of books on ‘chaos theory’. Traders should think about the chaos of the market as of something negative. Williams calls chaos a higher form of order which is governed not by cause and effect but by randomness. The market follows a path of least resistance which is defined by a hidden structure, like the flow of a river depends on the underlying structure of a riverbed. A trader has to discover the market’s structure and trade according to it. Another situation when you need to urgently exit the trade is the reversal signal.

Today, however, aggressive short sellers also attend the tops of trends and that fact changes the market behavior at the end of significant trends. The bull market reverses when the bulls give way to the bears. Bill williams trader The bears giving way to the bulls in a downward market marks all reversals in a downward trend. The red zone in the chart marks the Alligator sleeping for a long time while there is a sideways trend.

Market structure according to Williams Theory

He wrote a series of books on performance trading and developed methods to measure market trends, momentum, and trading activities. He also shares his daily trading strategies on his Traderfeed blog. In addition, Williams was a pioneer of trend trading and has a number of equities indicators. His most famous one is the Alligator indicator, which displays three lines that indicate the market’s state. If the three lines are close together, the alligator is sleeping.

• This indicator is created out of his other indicator the Awesome Oscillator.
• Its work principle is similar to the famous MACD indicator.
• This was mainly influenced by a significant increase in the volatility of liquid assets.
• Therefore, we will look for the earliest signs of a reversal trend.
• This is a sleeping phase, and most traders are best to stay away.
• It should be red (momentum moving down) because all bullish divergent bars are created while the market is in a down move.

Any trading platform will suit for this trading system, as indicators of Bill Williams has long become standard in any terminal. The strategy can be used on any timeframe, but the author recommends the daily chart. He Average True Range is a volatility indicator measuring how much the price of an asset has moved over a certain number of periods, in other words how volatile the asset is. Welles Wilder and was featured in his book “New Concepts in Technical Trading System”. It was originally designed as a volatility indicator able to capture gaps in…

Gator Oscillator

Initially, Williams’ ideas aroused much controversy because of their revolutionary nature. Indeed, in his theory, the analyst disputes the truth of some unshakable laws of fundamental analysis. The first version of the strategy Profitunity was developed in the 80s of the last century. Since then, the principle of pricing of financial instruments has undergone significant changes. This was mainly influenced by a significant increase in the volatility of liquid assets.

In 1987, his first works on trading in the stock market were published. The author violently criticized the traditional methods of analyzing graphs. In his opinion, fundamental and technical analytics lack objectiveness. Williams was convinced that a complex of random factors had a key influence on the pricing of a financial instrument. The Bill Williams Market Facilitation Index (BW MFI) indicator is designed to measure the willingness of the market to move the price. It is basically an assessment of how market prices react to new volume in the market.

Horrible Mistakes You’re Making With Forex Trading

So, we have studied the theory and the practical application of the Three Wise Man trading strategy. If you like trend trading systems, you https://investmentsanalysis.info/ should try this method, as it performs great results in any market. It can also be combined with the VSA model and Elliot wave theory.