Bill Williams: Trading Chaos, the Alligator and Fractals
Williams applied ideas from chaos theory and psychology to markets, and created the Alligator, fractals and the Awesome Oscillator.
Trade a real day like Bill Williams
A real market day with the date hidden. Run the checklist on the chart, then buy, sell or stay out: the real candles answer.
Check every point of the list before you decide. Stay out if the setup is not there.
Who they were
Bill Williams was an American trader with a background in psychology who traded for decades and taught his methods through Profitunity.
He published "Trading Chaos" (1995) and "New Trading Dimensions" (1998), introducing the Alligator, fractals, the Awesome Oscillator and the Accelerator Oscillator.
Principles and rules
1. Markets are chaotic
Price is driven by many participants; look for structure in the chaos rather than predictions.
2. The Alligator
Three shifted averages show whether the market is sleeping (ranging) or eating (trending).
3. Fractals
Five-bar turning points mark where the market can break out.
4. Trade the trend
Most profits come from the few trending periods.
Key lessons
- Stay out when the Alligator sleeps.
- Fractal breakouts give clear entries and stops.
- Psychology is part of the method.
Strategies from this method
How to practise it
The Alligator strategy page has the rules. In Candlemind write the three smoothed averages in My indicators and mark fractals by eye.
Frequently asked questions
What is the Alligator indicator?
Three smoothed moving averages shifted forward (13/8, 8/5 and 5/3) that show whether a market is trending.
What is the Awesome Oscillator?
The difference between a 5 and a 34-period simple average of the bar midpoints.
Summaries and paraphrases of public books and interviews, for education. Not investment advice.