Classical description: The Alligator of Bill Williams is the combination of three balance lines (pic. 1): Alligator's Jaw (the blue line) — 13-period moving average at the mid price (High+Low)/2, which is offset 8 bars into the future; Alligator's Teeth (the red line) — 8-period moving average at the mid price (High+Low)/2, which is offset 5 bars into the future; Alligator's Lips (the green line) — 5-period moving average at the mid price (High+Low)/2, which is offset 2 bars into the future. The formula for the Alligator: MEDIAN PRICE = (HIGH + LOW) / 2 ALLIGATORS JAW = SMMA (MEDEAN PRICE, 13, 8) ALLIGATORS TEETH = SMMA (MEDEAN PRICE, 8, 5) ALLIGATORS LIPS = SMMA (MEDEAN PRICE, 5, 3) Where: MEDIAN PRICE — midpoint price; HIGH — the highest bar price; LOW — the lowest bar price; SMMA (A, B, C) — smoothed moving average (A — smoothed data, B — smoothing period, C — shift into the future). ALLIGATORS JAW — blue line; ALLIGATORS TEETH — red line; ALLIGATORS LIPS — green line. Picture 1. 24 October 2006. The ideal trend. The ideal Alligator indices. This picture with the following explanations can be found in any manual about forex trading: If all three lines are intertwined, the Alligator is "asleep" and the market is range-bound. The longer it sleeps, the hungrier it gets. When it wakes up from a long sleep it chases the price much farther, therefore price movements are much stronger. When the Alligator is asleep, stay square. Once the Alligator wakes up, it opens its mouth (Balance lines diverge) and starts hunting. Having eaten enough it goes to sleep again (Balance Lines converge), so it's time to fix profits. If the Alligator is not asleep, the market is either uptrending or downtrending: If the price is above the Alligator's mouth, then it's an uptrend; If the price is below the Alligator's mouth, then it's a downtrend.