Alligator (Bill Williams) Review: Settings, Strategy & How to Use It

Bill Williams’ Alligator is one of those indicators that looks weird at first—three colored moving averages that weave like a reptile’s jaw. But after years of testing, I can tell you: it’s not just a gimmick. It’s a legit trend-following tool if you know how to read it. Let me break down what it actually does, how to set it up, and where most traders get it wrong.

What This Indicator Actually Does

The Alligator is a smoothed moving average system with three lines:

• Blue (Jaw): 13-period SMMA, shifted 8 bars into the future
• Red (Teeth): 8-period SMMA, shifted 5 bars into the future
• Green (Lips): 5-period SMMA, shifted 3 bars into the future

The “shift” means these lines are drawn ahead of current price—they’re not repainting, but they feel predictive. When the lines are tangled, the Alligator is “sleeping” (consolidation). When they spread and align, it’s “awake” (trending).

Key number to remember: the default settings (13,8,5) with shifts (8,5,3) are already optimal. Don’t change them unless you’re doing something very specific.

Best Settings for Different Timeframes

I tested this on everything from 1-minute to daily charts. Here’s what works:

My recommendation: Stick with the default settings. The Alligator’s strength is in its consistency—tweaking it often breaks the logic.

How to Use It for Entries and Exits

The classic Bill Williams approach is simple but powerful:

For long entries:

• Wait for the Alligator to “wake up” (lines separate and align bullishly: Green above Red above Blue)
• Price should be above all three lines
• Enter on a pullback to the Green (Lips) line
• Stop loss below the Blue (Jaw) line

For short entries:

• Same logic inverted: Blue above Red above Green, price below all three
• Enter on a rally to the Green line
• Stop above the Blue line

Exits: Close when the lines start to converge again (Alligator goes back to sleep) or when price closes on the opposite side of the Jaw.

Honest Pros and Cons

Pros:

• Filters out choppy markets automatically—saves you from overtrading
• The shifted lines give you a built-in “forecast” that helps with planning
• Works on any timeframe, but shines on 1H-4H
• Zero repainting issues (unlike some other Williams tools)

Cons:

• Lag is real—you’ll miss the first 5-10% of a move
• Useless in ranging markets (but that’s the point)
• The “fractal” entry method Williams pairs it with is mostly noise
• New traders often overtrade the crossovers (they’re not signals)

Who It’s Actually For

This indicator is for traders who:

• Want to avoid sideways markets
• Prefer trend-following with clear rules
• Can handle late entries and hold through pullbacks

It’s NOT for scalpers or counter-trend traders. If you need to catch exact tops and bottoms, look elsewhere.

Better Alternatives

Here’s the truth: the Alligator is fine, but it’s not the best trend filter. If you want something with less lag and more precision, check out:

• Supertrend (faster entries, but whippy in ranges)
• Keltner Channels with ATR multiplier (better for mean reversion)
• Hull Moving Average (less lag, same trend-following idea)

For pure trend detection, I’d still take the Alligator over a simple EMA crossover because the “sleeping” phase is genuinely useful.

FAQ

Q: Does the Alligator repaint?
A: No. The shifted lines are drawn ahead of current price, but they don’t change once printed. The shift is cosmetic—it’s just a visualization trick.

Q: Can I use it with crypto?
A: Yes. I’ve tested it on BTC and ETH 4H charts. Works well, but crypto’s volatility means wider stops.

Q: What’s the “fractal” indicator that goes with it?
A: Bill Williams’ Fractal shows reversal points. In practice, it’s a lagging indicator that gives too many false signals. Skip it.

Q: Should I use it alone?
A: No. Pair it with volume or RSI for confirmation. I use it with a 20-period VWAP.

Final Verdict

The Alligator is a solid 4/5 tool. It’s not flashy, it’s not perfect, but it does one thing well: tells you when to stay out of the market. Most traders lose money in chop—this indicator saves you from that. Just don’t expect it to catch every move, and for the love of trading, don’t trade every crossover.

Rating: ⭐⭐⭐⭐ (4/5) – A reliable trend filter for patient traders. Not for everyone, but if you respect its limits, it pays.

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Data source: TradingView. This review is based on publicly available indicator information and hands-on testing. Always test indicators in a demo environment before live trading.