Alligator-QQE Momentum Expansion Strategy

Family: trend_following · Regime: trending · Complexity: medium · Asset classes: Equities, Forex (Major pairs > 2.00 price), Commodities · Timeframes: H1, H4, D1

Thesis

Markets move from periods of 'sleep' (low volatility) to 'hunger' (trend expansion). By combining Bill Williams' balance lines with QQE's volatility-adjusted RSI momentum, we can identify the early stages of expansion while filtering for liquidity and using Bollinger Bands to define the 'volatility envelope' of the trade. The edge relies on the structural tendency of trends to persist once momentum and multi-timeframe averages align.

Components

Bill Williams Alligator (regime) — Establishes the trend regime; the strategy only takes trades when the 'mouth' is open (Lips > Teeth > Jaws).
Qualitative Quantitative Estimation (QQE) (direction) — Provides a momentum filter via smoothed RSI to ensure the trend identified by the Alligator has sufficient internal strength.
Plotshape Test Indicator (entry) — Acts as a final threshold filter; requires the asset price to be above the nominal value of 2.0, which filters out penny stocks and low-value assets where SMA lag is most destructive.
Gator Oscillator (Standard) (exit) — Signals the 'sated' phase of the trend (contraction of the balance lines) to trigger an exit before the full reversal occurs.
Bollinger Bands (risk) — Uses volatility-based boundaries for dynamic stop-loss placement and position sizing.

Known failure conditions

Extended sideways price action where Alligator lines intertwine constantly (sleeping) resulting in high commission burn.
Price action consistently below 2.0 (e.g., penny stocks), rendering the Entry indicator's hardcoded threshold impossible to trigger.
Violent V-shaped reversals that occur faster than the SMMA smoothing of the Gator Oscillator can detect.

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