Alligator indicator VS MACD indicator
Indicators are one of the trading tools used to be able to provide information to forex traders about market conditions. In the world of trading there are many indicators that number in hundreds. Among them are alligator indicators and MACD indicators which we will discuss as follows:
The first is the Alligator indicator, this indicator was created by Bill William. He is a technical / chartis expert who develops the concept of Chaos Theory and the special effects that occur in the market. Named the alligator indicator because the activity of market participants is analogous to that of a crocodile. In principle, this one indicator is a combination of balance lines from Moving Average which is divided into three, namely:
- Blue Line
The blue line is the MA line with the longest period of 13 and is used as a benchmark for the other two lines
- The line is green
The green line is shorter in size, 8, the function creates a signal if this line intersects the blue line
- Red line
The red line is the MA with the fastest period, its function is to confirm when you should start opening a position
How to use the alligator indicator
- If all three Moving Average lines are blue, green and red move upwards.Sequentially in sequence or all three lines form the mouth of the Alligator. If this happens, it indicates that the trend is moving up
- If the price or candle is above the mouth of the Alligator or above the three Moving Average lines
- If all three Moving Average lines move downward. In sequence, this means indicating the trend is moving down
- Prices or candles are below the mouth of the Alligator or below the three MA lines
When using the Alligator indicator, make sure you observe the distance between the lines. If the distance between blue, green and red is far apart or wide, it means the market is stuck. If this happens you can make it an opportunity for trading.Conversely, if the three lines are close together or cross-linked, it means that the market is not good for transactions.
The function and usefulness of the alligator indicator is
- To facilitate its users in understanding and getting a signal to open a position.
- To determine the trend of rising prices and falling prices.
While the weakness of the accuracy of this indicator is sometimes less strong and clear. This is due to the continuous nature of this indicator. The point is that when the price has moved with a fast and sharp price movement, generally this indicator will be too late to respond. So if you want to use this indicator, it’s better to use it when a major pair with a clear and stable trend.
MACD is an indicator developed by a professor named Gerald Appel in 1970. MACD stands for Moving Average Converging Divergence. MACD is used to see the deviations or changes in price movements.
These deviations are:
That is the condition where the graph is getting lower, but on the other hand the indicator is getting higher. When convergence occurs, the graph will reverse the direction to go up. So what can be done is to take an open buy position. The entry point is when the histogram bar is higher than before after converging.
Divergence is a condition when the graph is getting higher and the indicator is getting lower. Conversely, if it converges up, the divergence will decrease after a divergent market occurs. The entry point when the stem of the histogram is lower than before after divergence occurs.
In addition to the two entries above, you can also open positions with entry points below:
- When there is a crossing between the signal line and the histogram stem.Where the open buy entry point is when the signal line is below the histogram. Open sell data entry point is when the signal line is above the histogram
- When there is a shift in the position of the histogram from positive to negative or to the opposite. Open buy entry point is when the histogram has only been positive or has just crossed the 0 line from below. Vice versa.
The functions and uses of this indicator include:
- Identifying price trends
- Knowing trend reversal and detecting momentum
- Identify overbought and oversold
Even so, this MACD has weaknesses. Standard settings from MACD often bring up fake signals or false signals. For that you have to be more careful using this MACD. It is advisable to wear on a longer time frame, such as an hour chart or daily chart.