The Alligator Indicator is a trend timing tool popularized by Bill Williams. It overlays three smoothed moving averages on price, then shifts each average forward by a fixed number of bars. The practical goal is not to predict direction on its own, but to help you separate two market states that matter to most traders: sideways chop versus directional movement. When the lines are intertwined and flat, the market is often range bound. When the lines separate and align, trends are more likely to persist.
If you trade breakouts, trend continuation, or swing trends, the Alligator is mainly useful as a filter and a structure tool. It can keep you from forcing trades in low quality chop, and it can give a consistent way to describe trend phases using the spacing and ordering of the lines.
What the three lines represent
The Alligator has three components, commonly described as:
- Jaw (slow line)
- Teeth (medium line)
- Lips (fast line)
They are not three different indicators. They are three smoothed moving averages calculated on the same price series, but with different lookback lengths and different forward shifts. Because the fast line reacts first and the slow line reacts last, you can interpret their order and separation as a rough map of trend development.
A common interpretation framework is:
- Sleeping: lines are close together and often crossing
- Awakening: lines start to separate after being compressed
- Eating: lines are separated and aligned in trend order
- Sated: separation narrows and crossings begin again
You do not need to use this language, but the visual behavior is the core concept.
How it is calculated
Most charting platforms implement the Alligator with these default parameters:
- Jaw: 13 period SMMA, shifted forward 8 bars
- Teeth: 8 period SMMA, shifted forward 5 bars
- Lips: 5 period SMMA, shifted forward 3 bars
The price input is often the median price:
- Median Price = (High + Low) / 2
The smoothing is typically a Smoothed Moving Average (SMMA). SMMA behaves like a heavily smoothed average that reacts slower than an EMA and often smoother than an SMA, depending on the implementation.
A simple way to express the SMMA recurrence is:
- SMMA(t) = (SMMA(t−1) × (N−1) + Price(t)) / N
Where:
- N is the period length (5, 8, 13 in the default settings)
- Price(t) is typically the median price at time t
Then the plotted Alligator lines are the three SMMAs shifted forward by their offsets. The forward shift is important because it changes how you read the lines. The Alligator is not just three moving averages, it is three moving averages displaced into the future, which visually emphasizes phase changes and reduces some of the clutter of constant crossings.
Most used settings and what traders change
The default 13, 8, 5 with shifts 8, 5, 3 is the most widely used configuration, mostly because it is the standard template on many platforms. Traders who stick with it do so for consistency, and because the fast medium slow spacing creates a clear structure across many liquid markets.
What tends to vary in practice is not the core ratios but the timeframe and sometimes the price input:
- Short term traders often keep the default periods but use lower timeframes, accepting more noise
- Swing traders use the default on daily charts, or slightly slower settings to reduce whipsaws
- Position traders may increase periods to reduce sensitivity, at the cost of later signals
- Some traders switch the input from median price to close, mainly for alignment with other tools
If you want to tune it without breaking its character, keep the fast medium slow relationship intact. The moment you compress the periods too much, you often end up with frequent crossings and less useful structure.
Why traders use the Alligator
Traders use the Alligator for three practical reasons.
First, it acts as a range filter. When the lines are tangled and flat, trends often fail. This can help you avoid taking breakout signals that lack follow through.
Second, it provides a trend structure for staying in trades. When the lines remain separated and in correct order, it visually supports holding through pullbacks.
Third, it gives a consistent language for trend phases. Even if you use other entry triggers, the Alligator can standardize how you decide whether you are trading a trend phase or a chop phase.
If you already use trend strength tools like the Average Directional Index (ADX) or direction tools like the Directional Movement Index (DMI), the Alligator often complements them by adding a clean, price anchored visual structure.
How it behaves on charts
The most important chart behavior is compression then expansion.
In a sideways market, price oscillates around value. Moving averages converge and cross. With the Alligator, that convergence is usually very obvious because all three lines cluster tightly. If you try to buy every small push above the cluster, you will often be buying the top of a range.
In a developing uptrend, the fast line typically rises first, then the medium, then the slow. In clean trends, the lines tend to align in a consistent order, with the fast line on top, then the medium, then the slow, and with visible spacing between them. Downtrends often mirror the same behavior but inverted.
Pullbacks often show up as price moving back toward the lines. In strong trends, price may respect the fast or medium line as a dynamic area, and the lines may stay separated even during normal retracements. When the lines start to converge and cross again after a long separation, it often signals that the trend phase is weakening or transitioning to consolidation.
When it tends to work and why
The Alligator tends to work best when the market offers sustained directional movement, and when your strategy is aligned with that objective.
It is most helpful in:
- Breakout and trend continuation environments, where you want to avoid chop and ride expansions
- Markets with smooth swings and strong participation, where trends persist long enough for separation to matter
- Trend following plans that accept late entries in exchange for fewer false starts
The reason is structural. Moving average separation is a lagging confirmation that momentum is present. The forward shifting makes the phase change easier to see, which supports disciplined filtering. You may enter later than the first reversal candle, but you are less likely to trade every minor wiggle.
A practical way to use it is as a condition rather than a standalone signal. For example, you might decide to only take long entries when the lines are aligned and expanding, and only take short entries when they are aligned downward and expanding. Then you layer your actual entry trigger on top, such as a breakout, a pullback entry, or a volatility contraction expansion.
When it tends to fail and why
The Alligator tends to fail in the same places most moving average tools fail: in mean reverting conditions and noisy transitions.
It commonly struggles in:
- Tight ranges, where repeated crossings produce frequent false phase changes
- Choppy bear market rallies or news driven spikes, where price moves fast but does not sustain direction
- Early reversals, where the first part of the new move happens before the lines can realign
The core limitation is lag. Because SMMA is smooth and the lines are shifted forward, you will not get early signals. If you try to trade reversals purely from line crossings, you may enter after a large part of the move is already done. Also, if you treat any small separation as a trend, you may still get whipsawed when volatility is high and direction is unclear.
A second limitation is interpretation drift. Different platforms can calculate SMMA initialization differently, and some may use close instead of median price. The visual may differ slightly. That matters most on shorter timeframes.
One short checklist can help avoid common misreads:
- Avoid treating tangled lines as a trade signal
- Require clear separation and consistent line order for trend conditions
- Use a separate trigger for entries, not just line crossings
- Expect late confirmation, and size risk for that reality
Summary
The Alligator Indicator is three shifted smoothed moving averages, usually calculated on median price, designed to highlight market phases. The default configuration uses 13, 8, and 5 period SMMAs shifted forward by 8, 5, and 3 bars. When the lines are intertwined, the market is often range bound and trend trades tend to underperform. When the lines separate and align, trends are more likely to persist, making the Alligator useful as a filter and a trend structure tool.
It tends to work best in sustained trend environments where you prioritize fewer false starts over early entries. It tends to fail in choppy, mean reverting markets and during sharp transitions where lag is costly. Used as a condition plus an entry trigger, it can improve consistency in trend following and breakout oriented systems.