Understanding The Aligator Analogy Indicator
The Aligator Analogy Indicator is an analytical tool for understanding the relationships between market value and the price of a security, company, or project. This tool is one of the best used technical tools in the finance department.
It can be used to identify similar companies. It also helps users to determine what would happen if they were buying or selling securities at a certain price.
What is the Aligator Analogy Indicator
The Aligator Analogy Indicator (AAI) is a basic analytical tool for understanding the relationships between market value and the price of a security. It has four specific points that are all connected by lines.
Bill Williams was unyielding that an effective trader will know the construction of the market. With regards to this line of reasoning, the Alligator indicator comprises of three moving midpoints, each streamlined distinctive time periods, which he called 'balance lines'. If you look at the balance lines you will be able to decide the structure of the current market situation, all in all, whether we are dealing with a sleeping alligator or not.
How it Works
The Aligator Analogy Indicator starts by using the company's market capitalization, which is the number of shares times the price of one share. After all of the procedures, traders need to multiply it by 100 to convert it into shares and dollars.
Then, it takes the company's book value and divides it by the total company's market cap.
The result is expressed as a percentage and graphed on a chart.
This graph makes it easy to compare one point with another point in order to determine whether or not you should buy or sell something at certain prices.
In order to make a trade with someone, you need to understand what they want and be able to provide it. There are times when one side wants something that the other side doesn't have and vice versa. If you want to trade on both sides then you need to find a way to meet in the middle.
The Aligator Analogy Indicator is a helpful tool for understanding how different types of people think about the trades they offer. For example, if you have a meeting with a person who wants to close as fast as possible, they might offer a trade as soon as they hear your request. But if they do this too soon, it might disrupt your negotiation process.
This is just one example of how the Aligator Analogy Indicator can help you understand people's different styles.