DeMarker Indicator Explained What is the DeMarker Indicator?

demarker indicator

If the current high is smaller or equal to the previous bar high, zero value is registered. The received value becomes the DeMarker indicator numerator and is divided by the same value plus the sum of differences between price lows of the previous and current bars. If the current price low is bigger than the one of the previous bar, zero value is registered. Most oscillating indicators tend to be lagging, but as demonstrated, the DeM has a unique ability to predict reversals in market pricing behaviour.

As other technical indicators, it is best used in combination with other tools. The DeMarker or “DeM” indicator is another member of the “Oscillator” family of technical indicators. Thomas Demark created the DeM in an attempt to measure the demand for the underlying currency pair.

News & Analysis

When it comes to the speed we execute your trades, no expense is spared.

  • He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses.
  • According to Thomas DeMark, when values rise above 0.7, the market is in overbought zone and soon you can expect decline.
  • If you like an asset’s story now, chances are high that you will continue to like it minutes, hours, days, and even weeks from now, particularly in the absence of a compelling counter-narrative.
  • Whether you’re a seasoned trader or just starting your trading journey, this strategy based on the DeMarker indicator will help you to stay ahead in the markets.
  • There are several ways to build a robust trading strategy that involves the unique signalling power of the DeM.

This indicator is designed to overcome the general shortcomings of traditional overbought and oversold technical indicators. Nick has over 25 years of financial market experience as a commodities and foreign exchange trader in investment banks and prop firms. In addition, he has built trading tools to help traders improve their market knowledge and trading mindset. Having worked in Sydney, London, New York, and now Tokyo, Nick has a unique insight into market psychology and the challenges traders face at all levels. The best Demarker trading guide was designed so it can give you different perspectives on the price action.

Auto Trend Lines Channels Indicator

The “DeM Rollercoaster” tends to work better for longer timeframes, i.e., daily, but as shown, shorter periods can be accommodated. The DeM indicator attempts to convey price exhaustion, but timing is a weakness that can be overcome using another indicator for validation. In the above chart, two overbought and two oversold conditions follow the initial overbought signal and are evident by the various “limit” crossovers.

If the current period (bar) maximum is higher, the respective difference between the two will be registered. If the current maximum is lower or equaling the maximum of the previous period, the naught value will be registered. The received value is used as the numerator of the DeMarker and will be divided by the same value plus the sum of differences between the price minima of the previous and the current periods (bars). If the current price minimum is greater than that of the previous bar, the naught value will be registered. A shorter timescale will make the indicator more sensitive and is better for spotting entry and exit points but it will also increase choppiness and make false signals more likely. Divergences in the movement of the indicator and the price itself can be used to pick the top or bottom of a market.

Advanced ADX Indicator

DeMMAX is a value derived from comparing the maximum value for the current bar to the maximum value of the previous bar over “n” periods. If you want to gauge whether an asset might be overbought or oversold while trading Forex, one tool you can use is the DeMarker indicator. This indicator also is sometimes called the “DeMark” indicator or simply “DeM.” The name can also be stylized “DeMARK.” DeMark offers parameter 13(14) and author didn’t leave any tips about trading on timeframes below D1.

DM based sub-indicators added to hint the momentum and changes in the ADX. The volatile markets tend to produce big price swings, so a timing indicator like Demarker, demarker indicator will give you an edge in this type of environment. When the oscillating line passes above 0.70, that is an indication that the market conditions may be overbought.

How to use the DeMarker Indicator Strategy

As noted earlier, DeM is best used in combination with other technical indicators. For this reason, we have the Fibonacci extensions deployed to identify support levels where the sellers may hit an impasse, providing the buyers with an opportunity to drive the price action higher. The blue arrow shows the moment the price action touches the 127.2% Fibonacci extension support, signaling that the buyers are likely to step in at this price level, and drive the price higher. In addition, the sellers are likely to exit their profitable trades at this point as well. In the meantime, we see that DeMarker has a reading of 0.277, which shows that the market has entered an oversold territory. At this moment, we have a confluence of two bullish signals – market is oversold according to DeMarker, and the price action has approached the first Fibonacci extension support.

Which is the most powerful indicator in trading?

  • Moving average (MA)
  • Exponential moving average (EMA)
  • Stochastic oscillator.
  • Moving average convergence divergence (MACD)
  • Bollinger bands.
  • Relative strength index (RSI)
  • Fibonacci retracement.
  • Ichimoku cloud.

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