Trading indicators of Bill Williams

Ted Capwell

Bill Williams is considered in the financial market a very ambiguous figure – many consider him a great trader and Guru of analysis, others refer to his activities as extremely ephemeral concepts that are not related to trading. The latter, in our opinion, are mistaken – Williams was a practicing trader, and his financial performance on the market says that in many theories and questions he was right!

The reasons for this attitude to a well-known investor are his strategies and theories, which are based on incompatible concepts – accurate and rational technical analysis and the theory of Chaos, as a form of higher order! Note that this philosophy has been yielding fruit for many years in the form of profits for thousands of investors and traders using the Williams system. To make it a little clearer, you need to tell a little more specific on what the trader’s system is working.

So, Williams developed a whole theory of Chaos, according to which the market in the main part of its work moves chaotically and unorderedly, and only 25% of all time carries out orderly movements. On the basis of this he derived the theory that a detailed linear analysis of past market indicators can not determine trends in the price movement in the future. On the basis of this standard market indicators were called the absolute evil for trading and rejected as effective tools for market valuation. But to reject and criticize can only be offered something in return, and Bill Williams provided his vision and attitude to the market in the form of his strategy of generating forecasts in five dimensions and a whole set of innovative analysis tools. The entire Williams strategy is based on the following indicators:

– Estimates of fractals – the space of market movement
– Slowdown / acceleration is the strength of the phase
– The driving force is the energy of the phase pulse
– Zone – combined indicator of energy and momentum
– Balance sheet – market indicators, balanced at level 0

To effectively evaluate and determine these market indicators, Bill Williams has developed a series of author’s indicators, whose work we will consider in more detail. The reason for this interest in the indicators of analysis of this specialist is very simple – today Williams indicators have become a classic of technical analysis and are used not only as tools for working on the trader’s strategy, but also as components of other trading systems earned by market participants independently. So, the basic list of trading indicators of Bill Williams looks like this:

– AS (Accelerator / Decelerator)

The tool algorithm is necessary to determine the deceleration or acceleration of the market’s driving factor. Everything is based on Williams’ theory, which can be described by such a simple and logical assumption – before the market reverses, the driving force should decrease to the minimum values. The direct work of the service is based on the use of a standard histogram consisting of columns of red and green colors that indicate the strengthening or slowing of the market’s driving factor, as well as a zero level indicating a balance of indicators. The color scale of the histogram is very important in the operation of the indicator. So, the green columns of the tool, regardless of the direction of construction and position relative to the scale level, show the investor the moment of abandoning long trading positions. Red, in turn, shows periods in which it is not recommended to draw up short market positions.

The standard signals for the work of contracts in the market of this indicator are:

– For long positions – the appearance on the histogram of two green columns above the zero level
– For short – two red columns below the technical level of the indicator

For the signal to have the maximum accuracy, the author advises to evaluate broad market ranges from 4 hours or more.Bill Williams indicators for binary options


• Alligator indicator

This is perhaps the most famous and popular algorithm of market analysis, developed by Williams. His work is based on the use of a combination of moving averages, which due to smoothed indicators and the construction mode indicate a range of trade, where chaotic market movements are replaced by a clear trend. Developing the service, Williams took as the basis the behavior of the Alligator, which has a clearly established life cycle – sleep, hunting and again a dream. Thus, on a simple allegory, a high-precision and system indicator was born.

The principle of the Alligator’s work, as we have already said, is built on three moving averages with a narrow range of estimated periods that have a shift of several candles forward (in this case, the basic idea of ​​Bill Williams’s theory is traced, according to which only an estimate of future indicators can give a more accurate prediction for chaotic market). The alligator consists of jaws – a moving average with a period of 13 and a shift of 8 (blue moving), teeth – the average with a period of 8 and a shift of 5 (red movings) and lips – an average with a frequency of 5, shift 3 (green movings).

The work of the indicator allows you to determine the following areas of the market and generates such signals for registration of trading positions:

• Alligator’s dream – the lines are chaotically intertwined with each other without a pronounced direction. Such indicators require refraining from trading, as the market in this period reduces the indicator of the driving force before the formation of a new trend.
• The lines of the indicator intersect in the upward direction and at the same time strongly divergent relative to each other – this is a signal for the execution of the contract upwards
• Service flyovers intersect in a downward direction and diverge among themselves – The alligator went hunting and speaks of the birth of a falling trend – this is a signal for trading downIndicators by Bill Williams for binary options trading

• Indicator Fractal

This service is necessary to determine the extremes of market movements in periods where the price slowed the force of movement and unfolded to build a new local trend. Such points of plotting the developer calls peaks and bottoms.
The indicator’s work is based on an assessment of the pattern of building a bar – when a group of candles appears on the market, in which two candles are formed above each other (or lower relative to each other), and then candles appear with an upward (or downward for the trend down) direction of construction, while The average candle will act as a local peak or a market hollow. Such a cyclical pattern allows you to determine the level of a quotation turn with maximum accuracy and is a signal for a trade bet. For ease of identification of signals in the automatic algorithm of the instrument, the appearance of the arrow of the direction of the fractal with the direction of the contract design is laid.

Options trading Bill Williams indicators

• Gator indicator

This technical tool is an auxiliary resource when working on a standard Alligator. Therefore, it is mainly used in combination with a trend resource. The Gator is designed to determine the level of divergence of alligator removals, which determines more accurate indicators for the execution of contracts in the market.

The technical algorithm of the Gator oscillator, which works on two histograms that perform simultaneous construction of columns, both below and above the balance level. Thus, the trader can clearly determine the level of absolute discrepancy between the jaw and the teeth of the Alligator – a histogram above the technical level and the strength of the discrepancy between the teeth and the lips of the instrument – the columns below the balance level.

For the convenience of estimating the level of discrepancy of the means in the histogram of the oscillator, columns with different colors are used. So, using the service, you can define such zones of the Alligator work:

• Alligator sleeps – columns on both sides of the balance level are painted in red
• The alligator wakes up – the oscillator bars above and below the balance level are painted in different colors
• Alligator on the hunt – in both zones of the oscillator the columns have a green color
• The alligator is saturated – a red column appears in the alligator hunting zone

The additional volume of indicators formed on the auxiliary resource significantly improves the accuracy of the Alligator indicators, which accordingly increases the overall indicator of the effectiveness of the signals of the strategy.Trading Options with Bill Williams indicators


• MFI indicator

Service definition of the index of facilitating the market is a resource for assessing the desire of the market to move the quotes of the asset in a certain direction. When working in the mode of evaluating absolute service indices, the meaning of its application in trading is lost, therefore the indicator is usually used in the format of assessing the relationship between the market’s relief index and the dynamics of its volumes.

All absolute parameters of the service are defined in the form of histogram bars, and the ratio of volumes is characterized by the color scale of the columns. This approach to constructing indicator indicators allows us to more comfortably identify the technical signals of the resource. So the indicator forms such a set of key indicators for working in the market:

• The green column – the index of the MFI indicator and its volume grow. Activity of traders with constant growth dynamics indicates the acceleration of the movement of quotations, which signals the possibility of joining the trend movement of the market.
• Blue column – the index of the MFI indicator increases, and the volume falls. The pronounced movement of quotations on the trend continues, not taking into account the decline in the volume of trade – this indicator indicates an early possible turn of the market
• The pink column – the indicator of the MFI indicator is decreasing, the volume of trade is growing. The market movement is slowing down, however, the growing volume of trades speaks about the birth of a new impetus or a sharp technical turn of the market.
• The brown column – the index of the indicator MFI and the volumes of trading fall. The market entered the zone of uncertainty, which signals the abandonment of trading operations until the emergence of new drivers of price movements.

• Awesome Oscillator

The developer himself called this service an amazing indicator and this is natural. The tool, thanks to its ideal algorithm, is able to determine the specific points of change in the driving force of the trend, which makes it possible to determine the most profitable moments for the design of trading positions using technical models of constructing a histogram.

When working with the Awesome Oscillator, the following technical signals for trading are distinguished:

• Change the histogram column construction relative to the indicator balance level. When the histogram is transferred from the negative to the positive zone, it is necessary to open trading positions for the growth of the asset’s price, and vice versa, the transition from the positive to the negative zone of the indicator is a signal for the execution of contracts down.
• Two peaks – here two technical constructions of indicator construction are distinguished – formation of histogram peaks with descending dynamics relative to each other is a signal of a trend downward, peaks with an upward dynamics of construction speak of an uptrend
• Saucer – this technical mode of histogram formation has a construction design in the form of the appearance of 2 red bars and one green bar above the balance level, while the extreme columns of the cyclic regularity should be above the average red bar. This signal format is used to formalize a contract for a price increase. For work with the downward rates, it is necessary to use the signal in the form of a mirror image of the indicated construction below the zero level.Bill Williams binary options

As you can see, Bill Williams was able to develop indicators of automatic valuation of market quotes, which, even in chaotic motion, can determine trends that allow you to get a good financial result from trading.
We have provided you with only the basic set of services developed by a well-known trader. All of them can be used as separate technical strategies for assessing the market and trading, but at the same time provide opportunities in the development of multi-indicator systems.



“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”