Don’t waste your time – keep track of how NFP affects the US dollar!

Data Collection Notice

We maintain a record of your data to run this website. By clicking the button, you agree to our Privacy Policy.

facebook logo with graphic

Join Us on Facebook

Stay on top of company updates, trading news, and so much more!

Thanks, I already follow your page!
forex book graphic

Beginner Forex Book

Your ultimate guide through the world of trading.

Get Forex Book

Check Your Inbox!

In our email, you will find the Forex 101 book. Just tap the button to get it!

FBS Mobile Personal Area

market's logo FREE - On the App Store

Get

Risk warning: ᏟᖴᎠs are complex instruments and come with a high risk of losing money rapidly due to leverage.

76.5% of retail investor accounts lose money when trading ᏟᖴᎠs with this provider.

You should consider whether you understand how ᏟᖴᎠs work and whether you can afford to take the high risk of losing your money.

Trading strategy: three wise men and the alligator

Trading strategy: three wise men and the alligator

2022-08-26 • Updated

Information is not investment advice

Learn how to make real profit using the trading strategy of the world famous trader.  

Today we’ll discuss the strategy called “Three wise men and the alligator” created by Bill Williams. Williams is a famous trader, the author of the bestselling book “Trading Chaos” and of many MetaTrader indicators. He managed to increase his capital from 10,000 to 200,000 dollars during 2 years of trading in the stock market. Quite impressive! Let’s have a look at his strategy, that is also called the Profitunity trading strategy.

Alligator

The idea of this strategy is to capture a trend and entry it at the start. The Alligator indicator is responsible for the first part: it helps to catch big trends and differ them from fake ones. While, Three Wise Men are in charge of the second part: they set entry rules.

Now we need to add the Alligator indicator to the chart in order to understand how it works. Below you’ll find configurations to build the Alligator indicator.

strategy1.png

str2.png

str3.png

Often, before the big trend movement, all lines are intersected. This state is called "sleeping alligator". When the Alligator lines start separating, it means that the alligator is “hungry”, as it looks like it opens the mouth. This is the right moment to capture the move.

Remember!

The alligator sleeps, when all moving averages converge. Take a break!

The alligator is hungry, when all moving averages diverge. Be ready for downtrend/uptrend!

When you’ve built the alligator, move to the next step: Three Wise Men. They will help to find out where is the right entry.

The First Wise Man – Divergent Bar

The divergent bar determines the reversal in a ranging market.

Important! You should look at the area that is far away from the Alligator lines.

Signal to buy:

The bar has a lower low than the previous bar, and closes in the upper half of its range.

*It signals that when the bar opening, bears dominated the market, but they gave the way to bulls by its close.

str4.pngBullish divergent bar

Signal to sell:

The bar has a higher high than the previous bar, and closes in the lower half of its range.

* It signals that when the bar was opening, bulls dominated the market, but they gave the way to bears by its close.

str5.pngBearish divergent bar

The Second Wise Man – Awesome Oscillator

This is the extra condition to the first one. Then the Awesome Oscillator forms the third consecutive bar with a color similar to the first wise man trade direction. In other words, if your first wise man signals to buy, you’ll add on after three consecutive green bars. Otherwise, if your first wise man signals to sell, you’ll add on after three consecutive red bars.

Most traders start trading with the first wise man, they use the second one just to prove that their first signal was right and they add on to their position.

str6.png

The Third Wise Man – Fractals

Fractals help to identify breakouts on previous high or low. An up fractal is a signal to buy, a down fractal is a signal to sell.

The perfect moment is when the wise men gather together and it’s called the Profitunity signal.

str7.png

Sum up

Firstly, look if the first wise man is formed above/below the alligator’s lines. Then, wait for the “bullish”/” bearish” pattern to appear. Once you’ve entered the market, look at the second wise man – the Awesome Oscillator (there should be 3 consecutive green/red lines). Then, we address to the third wise man – wait for the formation of fractal. Once the fractal appeared, you should place the take profit near the high/low and the stop loss at the lowest minimum or the highest maximum.

Exit the market if the opposite signal appears – when the reversal pattern appears or when there are three similar consecutive bars on the histogram of the AO.

Watch the video with examples!

Similar

Pin Bar Trading Strategy

Sometimes a chart or a candlestick pattern may provide a decent entry signal if it is located at a certain level. A pin bar is one of the most reliable and famous candlestick patterns, and when traders see it on the chart, they expect the price to change its direction soon.

Japanese Candlesticks: a Complete Newbies’ Guide

Have you ever wondered how many wonderful tools did Japanese people invent? QR codes, car navigation, instant noodles, and sushi are just some of the Japanese things we can't imagine our life without.

Money Flow Index Trading Strategies

Among hundreds of different indicators and technical tools for traders, the relative strength index (RSI) is one of the most popular due to its simplicity and, at the same time, its power in various trading cases. In this article, we want to tell you about another powerful tool similar to RSI but with some cool tweaks.

Choose your payment system

Feel the Team Spirit

Callback

Please fill in the form below so we can contact you

Select the best time for us to call you. We give calls from Monday to Friday in suggested intervals. In case we couldn't get through, we will try again at the same time the next day. For getting real-time assistance, use FBS chat.

We provide only English-speaking callbacks. If you prefer any other languages, contact the support team.

We will call you at the time interval that you chose

Change number

Your request is accepted.

We will call you at the time interval that you chose

Next callback request for this phone number will be available in 00:30:00

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later