The Gator oscillator is a forex trading tool which is developed by Bill Williams. This Oscillator is an auxiliary oscillator to the Alligator Oscillator. It is most useful in markets that display strong directional action.
This oscillator is presented as a histogram with red and green bars. It was originally presented in the Profitunity Trading System (see the image below).
The difference between the long-term moving average which is the blue line and the medium-term moving average which is the red line bars above in the 0 (zero). The difference between the medium-term moving average which is the red line and short-term moving average which is green line bars below in the 0 (zero).In this oscillator Jaw is define the blue line, Teeth is defined by the red line and Lips is defined by the green line. In Zerodha Kite one can attach the indicator from the STUDIES section with the following default settings. Jaw Period is 13, Jaw Offset is 8, Teeth Period is 8, Teeth Offset is 5, Lips Period is 5, and Lips Offset is 3. See the Axis Bank chart image below:
The different stages of the oscillator in “Alligator” with two symmetrical bars. One is above the 0 line and another is below the 0 line. The Gator awakes, when one of the bars above or below the “0” line then it is red, and the opposite one is green. When both symmetrical bars are green then the Gator eats. The gator is sleeping, when both bars above and below the centerline are red. In this Oscillator after an ‘eating’ phase, the one of the upper or lower bars around the centerline turn red the Gator is said to be sated.
In this oscillator when a phase of the trend is at its incipient stages, one of the upper or lower bars will turn green then a phase of the trend accelerates and reaches its climax increasing number of ‘double greens’ where both the upper and the lower bars are green, so this is the eating phase. In this oscillator phase runs out of energy, and begins to slow down, one of the previously green bars will turn red, signalling that the gator is sated. In this oscillator when both bars are red, then the phase has ended, anticipating a new cycle.
This Gator Oscillator’s main problem is its complicated nature. It is essentially a combination of three moving averages, and whether the addition of the graph at the bottom contributes much value, or merely complicates the picture will probably depend on your trading style. It’s problems of trading with a moving average must be taken into account while a trader is making use of the Gator Oscillator indicator.
The Gator Oscillator’s advantage is the compactness of its display and instead of drawing three separate SMAs on the chart the bars below, which leaves enough space for the application in any number of additional indicators into the price data.