The Alligator indicator depicts a super trend trading strategy that identifies classic buy/sell signals for Forex and stock day traders.
The indicator consists of three smoothed moving averages that cross each other to plot the crossover signal at the moment of trend reversal.
In intra-day trading, the market trend direction becomes highly unpredictable, especially in highly volatile markets. In addition, prices intend to reverse more in a shorter period of time. However, not all reversal attempts end in a successful bullish/bearish trip. Therefore, it is crucial to spot a trend following movement which has a higher probability of hitting the target.
In terms of signal accuracy, the Alligator is a good competitor to the exponential and linearly weighted moving averages. However, in highly volatile markets, the indicator may lag slightly to confirm trend reversals.