When is the Alligator Trend confirmed?

Lips (SMMA5 of (high + low) / 2, shifted 3 candles) above the teeth (SMMA8, shifted 5) above the jaw (SMMA13, shifted 8) on this candle but not on the one before, and the close above the lips. Buy at that close; exit at the first candle where the lips are below the teeth. The shifts only use past candles. Paper traded on 1-hour and 4-hour candles with that exit and a protective stop inside the candle at the teeth or 2 x ATR14 below the entry, whichever is lower; the encyclopedia backtest uses that stop, a target of two times the risk and a 100-candle limit. Tested in docs/research/2026-10-indicator-tests.md.

When is the Alligator Trend invalid?

Lines already in order on the candle before (no new alignment), or a close at or below the lips.

Alligator Trend

BullishContinuationIntermediate

Lips over teeth over jaw, close above the lips. Exit when the lips cross the teeth.

Verdict: SkipBitcoin 4H: 373 trades, won 37%, avg trade +0.4% vs random day +0.7%. Backtest

Lips21 candlesJaw (13)

Alligator Trend: textbook shape, step by step

Smooth the middle of each candle over 13, 8 and 5 candles and shift them 8, 5 and 3 candles to the right: the jaw, the teeth and the lips.

step 1/4

Trade rules

Direction	Long (buy)
Entry	Lips (SMMA5 of (high + low) / 2, shifted 3 candles) above the teeth (SMMA8, shifted 5) above the jaw (SMMA13, shifted 8) on this candle but not on the one before, and the close above the lips. Buy at that close; exit at the first candle where the lips are below the teeth. The shifts only use past candles. Paper traded on 1-hour and 4-hour candles with that exit and a protective stop inside the candle at the teeth or 2 x ATR14 below the entry, whichever is lower; the encyclopedia backtest uses that stop, a target of two times the risk and a 100-candle limit. Tested in docs/research/2026-10-indicator-tests.md.
Cancelled if	Lines already in order on the candle before (no new alignment), or a close at or below the lips.
Target	Two times the risk, projected from the breakout

4 common mistakes

Reading the shifted lines as a forecast. Shifting them right only moves old values forward; they know nothing about the next candles.
Taking its profits as proof. Long-only crypto rose; random entries with the same exit earned almost as much.
Using simple averages of closes. The Alligator smooths the candle midpoint with Wilder's average.
Expecting it to sit out chop. It was in a position 35-37% of the time in our test.

Backtest

same rules every time · equal size · no fees · method

Market	Trades	Won	Avg trade	Random day
Bitcoin · 4H · 2017-2026	373	37%	+0.37%	+0.72%
US large caps (50) · 1D · 2016-2026	2507	43%	+1.57%	+1.88%

Verdict: SkipIt made money, but less than buying on a random day.

pattern +139%random +267%

Bitcoin 4H: pattern +139% vs random day +267% over 373 trades

pattern +3941%random +4712%

US large caps (50) 1D: pattern +3941% vs random day +4712% over 2507 trades

Real examples

Bitcoin · 4H

Breakout Oct 15, 2020, exit Oct 20, 2020 (target)+4.38%

21 candles11,385 · Oct 12, 2020Lips (5)11,396 · Oct 15, 2020Teeth (8)11,395 · Oct 15, 2020Jaw (13)11,336 · Oct 15, 2020The Alligator wakes

Bitcoin 4H, real candles from Oct 12, 2020

Starbucks · 1D

Breakout Oct 19, 2022, exit Nov 11, 2022 (target)+12.04%

21 candles90.79 · Sep 20, 2022Lips (5)87.52 · Oct 19, 2022Teeth (8)87.29 · Oct 19, 2022Jaw (13)87.27 · Oct 19, 2022The Alligator wakes

Starbucks 1D, real candles from Sep 20, 2022

JPMorgan · 1D

trapBreakout Sep 16, 2022, exit Sep 22, 2022 (stop)−5.01%

21 candles122.59 · Aug 17, 2022Lips (5)117.08 · Sep 16, 2022Teeth (8)116.16 · Sep 16, 2022Jaw (13)116.06 · Sep 16, 2022The Alligator wakes

JPMorgan 1D, real candles from Aug 17, 2022