"The trend is your friend …" Traders heard this often. So traders are looking for a way to set the direction of the trend and when they find a strategy that goes with that idea they get excited. They find a market that is clearly trending and test what they have learned. Often, however, new traders are at a loss when their first trades turn out to be losers. But why is it like that? Trend hunters often follow the trend instead of trading with it. They're often trending a little late and when they start trading the market reverses. The solution is to trade the early stages of the trend. That way, the trade would have a lot more wiggle room to work in your favor.
The Coppock Alligator Cross Strategy provides trading signals in the early stages of an established trend. Profitable trades generated by this strategy are often of low risk and high reward, since trades are made when the market is still of reasonable value. This allows for greater leeway to trade in your favor.
Alligator indicator from Bill Williams
The alligator indicator is a trend following indicator developed by legendary trader Bill Williams.
This indicator is essentially a series of modified moving averages, in particular the smoothed moving average (SMMA). The long-term moving average is called the jaw, the medium-term moving average is called the teeth, and the short-term moving average is called the teeth.
The trend is then determined by how the moving averages are stacked. When the moving averages are tight and choppy, the alligator is said to be saturated and may not be trending soon. When the moving averages wear off, the alligator is said to be eating with its mouth wide open and is currently in an uptrend.
The Coppock curve
The Coppock Indicator is an E.S.C. Coppock. It is basically a derived moving average, more precisely a weighted moving average of a sum of the rate of change.
It was designed with the intention of serving long term investors as requested by the Episcopal Church. Hence, the Coppock curve is a long-term trend indicator that traders can use to determine the long-term trend direction.
The Coppock curve is an oscillating indicator that determines trend changes based on the crossing of its histograms from negative to positive or vice versa.
The Coppock Alligator Cross Forex trading strategy is designed to allow traders to enter a confirmed trend based on the confluence of the Alligator Indicator and Coppock Curve.
The alligator indicator would be the leading indicator in this setup. Trades are made in the early stages of the trend based on the alligator indicator. At this point the moving averages are still starting to fan out.
However, trades are not made immediately during the crossover of the alligator indicator. Instead, trades are executed when the Coppock curve has already been crossed, which confirms the trend direction indicated by the Alligator indicator.
The key to this strategy is the early exit, which should be done before the actual market reversal. The alligator indicator tends to shrink just before a choppy market or a trend reversal. These contractions are usually accompanied by prices that close between the moving averages. Hence, we will close the trade once the price is between the moving averages for teeth and lips. This allows us to get out early and avoid having profits returned to the market.
- Jaw time: 26
- Tooth period: 12
- Lip period: 7
Time window: 1-hour, 4-hour, and daily charts
Currency pairs: Major and minor pairs
Trading session: Meetings in Tokyo, London and New York
Buy Trade Setup
- The alligator indicator should fan out with the lips on top and jaws on the bottom, indicating a bullish trend reversal
- The bars on the Coppock indicator should be above zero, indicating a bullish crossover
- Enter a buy trade at the confluence of the above conditions
- Set the stop loss to the support level below the entry candle
- Once the price closes between your lips and teeth or below, close the trade
Sell Trade Setup
- The alligator display should fan out with the jaws on top and lips on the bottom, indicating a bearish trend reversal
- The bars on the Coppock indicator should be below zero, indicating a declining crossover
- Enter a sell trade at the confluence of the above conditions
- Set the stop loss to the resistance level above the entry candle
- Close the trade as soon as the price closes between your lips and teeth or above
This trading strategy allows traders to catch trades on a confirmed trend reversal while still offering high returns in many cases. This is because the signals generated by the Coppock curve appear when the trend reversal is already confirmed. Although it is a lagging indicator, it still works well as the trading signals are usually generated when price retests the moving average bands. This enables us to achieve tighter stop losses, which in turn enables better reward-risk ratios and higher returns.
Forex Trading Strategy Installation Instructions
The Coppock Alligator Cross Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator (s) and template.
The essence of this forex strategy is to transform the accumulated history data and trading signals.
The Coppock Alligator Cross Forex trading strategy provides the ability to spot various specifics and patterns in price dynamics that are invisible to the naked eye.
Based on this information, traders can assume further price movements and adjust this strategy accordingly.
Recommended Forex Metatrader 4 trading platform
- Free $ 30 to start trading right away
- 2nd deposit bonus up to $ 5,000
- Unlimited loyalty program
- Award winning forex broker
Click here for the step by step XM Trading Account Opening Guide
How do I install the Coppock Alligator Cross Forex Trading Strategy?
- Download Coppock Alligator Cross Forex Trading Strategy.zip
- * Copy mq4 and ex4 files to your Metatrader directory / Experts / Indicators /
- Copy the tpl file (template) into your Metatrader directory / templates /
- Start or restart your Metatrader client
- Select the chart and timeframe in which you want to test your forex strategy
- Right click on your trade chart and hover over "Template".
- Move right to select the Coppock Alligator Cross Forex trading strategy
- You will see that the Coppock Alligator Cross Forex trading strategy is available on your chart
* Note: Not all forex strategies come with mq4 / ex4 files. Some templates are already built into the MT4 indicators of the MetaTrader platform.
Click below to download:
Get download access