Индикатор Демарк Форекс

What Is the DeMarker Indicator?

The DeMarker (or DeMark) indicator, also known by the abbreviation "DeM," is a technical analysis tool that compares the most recent maximum and minimum prices to the previous period's equivalent price to measure the demand of the underlying asset. From this comparison, it aims to assess the directional trend of the market.

It is a member of the oscillator family of technical indicators and based on principles promoted by technical analyst Thomas DeMark.

Understanding the DeMarker Indicator

The DeMarker indicator helps traders determine when to enter a market, or when to buy or sell an asset, to capitalize on probable imminent price trends. It was designed to be a “leading” indicator because it attempts to signal an imminent change in price trend. This indicator is often used in combination with other signals and is generally used to determine price exhaustion, identify market tops and bottoms, and assess risk levels. Although the DeMarker indicator was originally created with daily price bars in mind, it can be applied to any time frame since it is based on relative price data.

Unlike the Relative Strength Index (RSI), which is perhaps the best-known oscillator, the DeMarker indicator focuses on intra-period highs and lows rather than closing levels. One of its main benefits is that, like the RSI, it is less prone to distortions like those seen in indicators like the rate of change (ROC), in which erratic price movements at the start of the analysis window can cause sudden shifts in the momentum line, even if the current price has barely changed.

DeMarker Indicator Trading Strategy

The DeMarker indicator is composed of a single fluctuating curve and does not use smoothed data. The default time span for the calculation of the indicator is 14 periods, and as the number of periods increases, the indicator curve becomes smoother. Conversely, the curve becomes more responsive with smaller numbers of periods.

This oscillator is bounded between values of zero and one and has a base value of , although some variants of the indicator have a to scale. The indicator typically has lines drawn at both the and values as warning signals that a price turn is imminent. Values exceeding either line imply a higher probability of an imminent change in the current trend, while values between the lines imply a lower probability.

Overbought and oversold conditions are likely to be imminent when the curve crosses over these boundary lines.

The Validity of DeMarker Indicators

DeMarker indicators are a popular tool used by technical traders to time the market, but the rationale for the use of these indicators is not entirely clear, and the choice of their parameters is not often motivated or supported by data. A recent study backtested various DeM strategies on commodities futures market data to see if they were valid tools for timing the market.

The first conclusion from this research is that the number of signals the DeM indicators produce is small and rarely occurs. Compared to a simple buy-and-hold strategy, their results show that, in most cases, there is a limited range of holding days for which the indicators have predictive power.

Although DeM is advertised as a method to time trend reversals, in several cases, large price movements that followed a signal maintained the direction of the existing trend. According to the paper's authors, "these results contradict the design of the indicator and make it difficult to grasp the economic rationale behind it, which is assumed to be obvious."

Because of this, the DeM indicator should not be used by itself and may be more effective in combination with other technical indicators to confirm or refute the signals that it generates.

Demarker Indicator: Definition and Overview

If you're looking to improve your trading strategy, there's a technical analysis tool that you might want to consider - the Demarker Indicator.

This indicator has been gaining popularity among traders due to its ability to identify potential trend reversals.

The Demarker Indicator is calculated based on the comparison of the current period's high and low prices with the previous period's high and low prices.

This calculation methodology allows traders to interpret whether the market is overbought or oversold.

The Demarker Indicator attempts to signal an imminent buy or sell of an asset, allowing traders to capitalize on probable imminent price movements.

Compared to other technical indicators, such as RSI or Stochastic Oscillator, the Demarker Indicator provides a more accurate signal for trading decisions.

It can also be used in combination with other technical indicators for a more comprehensive analysis, keeping daily price bars in mind.

The Demarker Indicator compares the most recent price data to the previous period's price data, making it a reliable tool for traders.

There are numerous case studies that demonstrate the effectiveness of the Demarker Indicator in real-world trading scenarios.

By incorporating this tool into your strategy, you may be able to increase your profits and minimize losses.

So, if you're looking for a reliable technical indicator that can help improve your trading decisions, consider giving the Demarker Indicator a try.

With its unique calculation methodology and proven effectiveness in real-world scenarios, the Demarker Indicator explained may just be what you need to take your trading game to the next level.

How to Calculate the Demarker Indicator

The DeMarker indicator, also known as the DEM indicator or Demark indicator, is a popular oscillator used to identify potential price turns in the market.

Unlike the RSI indicator, it focuses on intra-period highs and lows rather than closing levels.

By comparing the current bar's high and low with the previous bar, the Demark indicator records values based on whether there is a higher high or a lower low, providing insights into market momentum.

To calculate the Demark value, a simple moving average (SMA) is applied to the recorded values.

The numerator, known as DeMax, represents the SMA of the recorded values, while the denominator is the sum of the SMAs of DeMax and DeMin.

DeMin represents the moving average of the values that correspond to lower highs or higher lows.

By dividing the DeMax SMA by the sum of the DeMax and DeMin SMAs, the Demark value is derived.

The resulting Demark values range between 0 and , indicating the strength of market momentum.

Values above 70 are considered overbought, suggesting a potential price turn to the downside, while values below 30 are considered oversold, indicating a possible upward price turn.

However, it is crucial to conduct thorough backtesting of the Demark indicator and adjust parameters to suit different assets, as market behavior can vary significantly.

By understanding the principles behind the Demark indicator and utilizing accurate calculations, traders can gain valuable insights into potential price turns and make informed trading decisions.

How to Use the Demarker Indicator in Forex Trading

Let's delve deeper into the world of Forex trading and explore how the Demarker Indicator can be used to your advantage.

As a technical indicator, the Demarker Indicator is a momentum-based tool that focuses on intra-period highs and lows to measure the demand for an asset and identify potential trend reversals.

The Demarker Indicator formula is based on the comparison of the current period's high and low with the previous period's high and low.

Forex traders can benefit from using the Demarker Indicator by analyzing trends and identifying potential reversals early on.

By doing so, they can minimize their risks and maximize their profits.

However, it's important to note that like any other technical indicator, there are both strengths and weaknesses associated with using the Demarker Indicator in trading strategies.

While it can be effective in identifying short-term trends, it may not always provide accurate signals during periods of high volatility or sudden market shifts.

The Demarker Indicator is a technical tool that can provide valuable insights into market trends and help you make informed decisions about entering or exiting trades.

By utilizing the Demarker strategy, you can increase your chances of success in this dynamic market.

It's important to remember that the Demarker Indicator is just one tool in a trader's arsenal, and it should be used in conjunction with other technical analysis tools to make informed trading decisions.

Understanding the Formula Behind Demarker Indicator

The Demarker Indicator is a technical analysis tool that is widely used in the financial markets to identify potential trend reversals.

It focuses on intra-period highs and is calculated based on the comparison between the current and the previous day's price range.

The Demarker Indicator formula takes into account the high, low, and closing prices of a security over a certain period of time.

It then calculates a ratio that measures the demand for an asset by comparing its price range with that of the previous day.

This ratio ranges from 0 to 1, with values above indicating overbought conditions and values below indicating oversold conditions.

To fully understand the Demarker Indicator, traders can use a demo trading account to practice and gain experience.

This will help them to identify the directional bias of the market and to identify market tops and bottoms.

In comparison with other technical indicators such as Moving Averages or Relative Strength Index (RSI), each has its own unique advantages and disadvantages depending on market conditions.

Price Action Analysis with Demarker Indicator Explained

Now, let's talk about the Demarker Indicator and how it can help you with price action analysis.

This powerful tool is often overlooked by traders, but it can provide valuable insights into market conditions.

The Demarker Indicator is a momentum oscillator and a technical analysis tool that attempts to assess overbought and oversold conditions in the market.

It focuses on intra-period highs and lows and compares the current price to the previous high or low, calculating a ratio based on this comparison.

This ratio is then used to plot a line on the chart, which can be used as a signal for potential trading opportunities.

One of the key benefits of using the Demarker Indicator is that it provides clear signals for entry and exit points in your trades.

By identifying overbought or oversold conditions, you can make more informed decisions about when to buy or sell assets.

Additionally, the Demarker Indicator is often used in combination with other technical analysis tools to increase its effectiveness.

In fact, some traders have reported that combining the Demarker Indicator with other indicators like the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD) have a % success rate in identifying profitable trades.

In addition to its usefulness in trading strategies, there are also several case studies that demonstrate the effectiveness of using the Demarker Indicator.

For example, one study found that incorporating the Demarker Indicator into a trading strategy led to higher returns than using other technical analysis tools alone.

If you're looking to incorporate the Demarker Indicator into your analysis, it's important to note that the indicator is calculated differently depending on the trading platform you're using.

However, most platforms will have the Demarker Indicator available as a built-in tool.

With its ability to identify overbought and oversold conditions and provide clear signals for entry and exit points, the Demarker Indicator could be just what you need to take your trading game to the next level.

Implementing a Successful Trading Strategy with Demarker Indicator

Firstly, let's understand the basics of a successful trading strategy.

A good strategy should have clear entry and exit points, risk management rules, and an understanding of market trends.

The Demarker Indicator can help with all of these aspects by providing insights into market momentum and identifying potential turning points.

To analyze the market trends using the Demarker Indicator, traders need to look at the indicator that typically has lines drawn on it.

This leading indicator shows the relationship between the current price and the previous low prices.

By looking at the indicator, traders can identify potential trend reversals or continuations.

Additionally, traders can use support and resistance levels in conjunction with the Demarker Indicator to confirm their analysis.

Now that we know how to analyze the market using the Demarker Indicator, let's implement a step-by-step guide to develop a successful trading strategy.

Firstly, identify your preferred time frame for trading - whether it be short-term or long-term.

Next, set up your chart with the Demarker Indicator and any other relevant indicators or tools.

Once you've identified potential trade opportunities based on your analysis, it's important to manage risk by setting stop-loss orders and taking profits at predetermined levels.

Remember that no strategy is foolproof - losses are inevitable in trading - but proper risk management can help minimize them.

The Demarker Indicator was originally created to offer traders a powerful tool to analyze market trends and make better trading decisions.

By looking at the indicator that typically has lines drawn on it, traders can identify potential trend reversals or continuations.

By following a list of trading steps, traders can develop a successful trading strategy that incorporates the Demarker Indicator and proper risk management techniques.

Frequently Asked Questions

Q: What is the DeMarker indicator?

The DeMarker indicator, also known as the DeM indicator, is a technical analysis tool used in financial markets to assess the strength and potential exhaustion of price movements. It is named after its creator, Tom DeMark. This indicator helps traders identify overbought and oversold conditions in an asset and assists in predicting potential trend reversals.

Q: How does the DeMarker indicator work?

The DeMarker indicator compares the most recent price range to the previous price range to determine whether the market is overbought or oversold. It calculates a value between 0 and 1, where values above typically indicate an overbought condition, while values below suggest an oversold condition. The indicator can be used to identify potential entry or exit points for trades.

Q: What are the common settings for the DeMarker indicator?

The DeMarker indicator settings typically include a period or lookback value, which determines the number of previous price bars used in the calculation. The most common setting is a period DeMarker indicator, where the indicator considers the past 14 price bars to calculate its values. However, traders can adjust this period based on their trading strategies and timeframes.

Q: How can the DeMarker indicator be used in trading?

Traders often use the DeMarker indicator in conjunction with other technical analysis tools to confirm signals and improve the accuracy of their trading decisions. When the indicator shows an overbought condition (above ), it might suggest a potential selling opportunity or a trend reversal. Conversely, when the indicator indicates an oversold condition (below ), it could indicate a buying opportunity or an upcoming trend reversal. It is important to consider other factors and indicators before making trading decisions solely based on the DeMarker indicator.

Conclusion: The Importance of Using Demarker Indicator

If you're looking for a reliable tool to help you make better trading decisions, the Demarker Indicator might just be what you need.

This technical indicator is designed to identify potential trend reversals and overbought/oversold conditions in the market.

The Demarker Indicator has several advantages over other technical indicators commonly used.

For one, it's less prone to false signals and can provide more accurate readings of market conditions.

Additionally, it's easy to use and can be customized to suit your specific trading style and preferences.

One of the key benefits of the Demarker Indicator is its ability to measure the demand in the market.

This is done by analyzing the maximum and minimum prices of a currency pair over a certain period of time.

By doing so, the indicator can help you identify when a currency is overbought or oversold, which can be a strong signal for a potential trend reversal.

Another advantage of the Demarker Indicator is that it can be used in conjunction with other technical indicators, such as moving averages and oscillating indicators.

This can help you get a more complete picture of market conditions and make more informed trading decisions.

But perhaps the most compelling reason to use the Demarker Indicator is its proven track record of success.

Traders who have incorporated this tool into their strategies have reported higher profits and lower risks compared to those who rely solely on other indicators.

So why not give the Demarker Indicator a try?

By adding this powerful tool to your arsenal, you'll be able to make more informed trading decisions based on reliable data and analysis.

And with its user-friendly interface and customizable settings, it's easy for traders of all levels to get started.

Introduction

In this article, we will explain what is a demarker indicator, how it can help traders identify trading opportunities, and provide an example of a Demarker trading strategy to help you identify trades and when to enter and exit a trade.

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. The DeM indicator relates recent price action to recent price ranges. Traders use the index to determine overbought and oversold conditions, assess risk levels, and time when price exhaustion is imminent. It has become a helpful tool to gauge the directional trend of the market since it tends to level out during a trend before signalling a coming change.

Thomas Demark was a prolific writer and businessman in the United States who cut his teeth as an officer of National Investment Services, a manager of multi-billion-dollar pension funds. In , he formed an investment advisory firm, DeMark Investment Advisory, serving major clients like George Soros, Goldman Sachs, and IBM. He is best known in the forex trading industry as a supplier of specialised software to support market-timing regimens, developing over 70 tools during his year career. Over the same period, he authored several books on market-timing techniques. In , he was awarded a Lifetime Achievement Award by the Market Technicians Association.

The DeM indicator with a period setting of &#;14&#; is presented on the bottom portion of the above &#;15 Minute&#; chart for the &#;AUD/USD&#; currency pair. In the example above, the &#;Green&#; line is the DeM, while the &#;Red&#; line, added as an additional option on the MetaTrader 4 platform, represents an exponential moving average for fourteen periods. DeMarker values below and over are worthy of attention. Bollinger Bands have also been added for more confirmation.

The DeMarker is classified as an oscillator since the resulting curve fluctuates between values of zero and &#;1&#;. However, some variants of the indicator have a &#;&#; and a zero scale, as well as &#;&#; versus &#;&#; on some charts. The indicator typically has lines drawn at the &#;&#; and &#;&#; values as warning signals. Values exceeding either boundary are deemed riskier, while values within are considered low risk. Overbought and oversold conditions are imminent when the curve crosses over these boundary lines, respectively.

The key reference points are high and low, especially when respective values approach zero or &#;&#;. 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.

As with any technical indicator, a DeMarker indicator will never be % correct. False signals can occur, but the positive signals are consistent enough to give a forex trader an &#;edge&#;. Skill in interpreting and understanding DeM signals must be developed over time. Complementing the DeMarker tool with another indicator is always recommended for further confirmation of potential trend changes.

There are several ways to build a robust trading strategy that involves the unique signalling power of the DeM. The DeMarker is classified as a leading indicator based on how its formula works with market prices. Unlike the popular Relative Strength Index (RSI), the DeM does not rely on closing price points. It looks at the entire trading period for highs or lows, thereby avoiding a bit of the chaos that can distort other indicators. As it bounces back and forth between its extremes, it illustrates the changing tides of both buying and selling pressures.

Unlike other oscillators, DeMark designed his indicator to make comparisons from one time period to the next, based on each pricing cycle&#;s relative highs and lows. His algorithm was then an &#;If/Then&#; kind of computer logic, which delivered a reflection of investor support for each successive moment. As with any indicator, practising trading on a demo system is the best way to learn how to incorporate the DeM into your trading toolbox. Combined with another indicator, it can become a powerful addition to your trading arsenal.

How is the DeMarker Indicator calculated?

What is the DeMarker indicator formula? DeMark devised four steps for calculating his namesake&#;s values, which appear to be very complex at first. As complicated as they might appear to be, the computer software will do the heavy lifting for you in real-time in the background on the MetaTrader4 platform, as well as for others. The sequence of steps is as follows:

• Choose a predetermined period &#;X&#; (Standard value is &#;14&#;, although a value of &#;8&#; or &#;9&#; tends to be more sensitive).
• Calculate DeMax = High – Previous High if >0, otherwise DeMax = 0.
• Calculate DeMin = Previous Low – Low if >0, otherwise DeMin = 0.
• DeM = MA of DeMax/(MA of DeMax + MA of DeMin).

The unique thing about this indicator is the insertion of zero values into the moving average stream. This process allows the DeM to hover at both overbought and oversold territories while the chosen asset is trending. The value of this unique property can be observed by taking another look at the overview chart depicted in the introduction.

The Bollinger Bands in &#;Blue&#; have been added for additional insights. The bands reflect two standard deviations about a centre line, which is a simple moving average, typically of 20 periods. This indicator is often used to gauge how prices are changing based on a measure of volatility. The &#;Red&#; exponential moving average reflects changing price values from another perspective.

Now observe how the red line foreshadows pricing reversals ahead of the Bollinger centre line. These forecasts occur when the red line crosses the Blue Bollinger moving average. It is also important to note how the candlesticks hover about the red line on the chart and then cross over to signal an abrupt reversal. If you look down to the DeM after each moving average crossover, then note that the path of DeM has already shifted into the trending direction, the reason why this indicator is said to be leading and not lagging, as with moving averages.

Learning to spot these subtle changes, as the combination of indicators works on your behalf, is best achieved on a demo-trading platform. All technical indicators use previous pricing behaviour to predict the future. None are perfect, but the DeMarker, in conjunction with other indicators, can give you an edge, which is one thing that will lead to successful trading. Practice and gain valuable experience using the DeM, and you will see benefits down the road.

How to use the DeMarker Indicator in forex trading

The DeM is sometimes referred to as the DeMark trend indicator due to its ability to react quickly to changing market conditions. As can be discerned from the above MT4 chart, the DeM tends to hover either above or below its midline during the presence of a strong or weak trend. The higher or lower it hovers can be interpreted as a gauge of the trend&#;s strength. Shifts also tend to be swift; when this indicator moves from overbought to oversold status, it is a signal a reversal is imminent.

The DeMarker indicator can then aid the forex trader on when to enter the market and when to close a position. Once a trend has begun, the DeM shifts quickly and then ranges. When it breaks out of one of these ranging periods, it is time to take notice. It is helpful to combine a trend following indicator like a moving average to confirm the DeM signal before reacting to what could be a false alert. Experience with the DeMarker in tandem with other technical indicators can tilt the odds in your favour when evaluating potential trading setup opportunities.

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A simple DeMarker Indicator trading strategy

The following trading system is for study purposes only. Technical analysis can provide alerts for potential trading opportunities, but previous pricing behaviour is never a guarantee of future results. With that caveat aside, we have inserted &#;Green&#; circles on the previous overview chart to illustrate optimal entry and exit points provided by using DeMarker analysis in combination with the Bollinger Bands in Blue and the EMA in red.

A simple trading system would then be:

• Determine your entry point when the &#;Green&#; DeM line dips below the &#;&#; lower limit line and then re-crosses the limit line in an upward motion.
• Execute a &#;Buy&#; order for no more than 2% to 3% of your account.
• Place a stop-loss order at 20 &#;pips&#; below your entry point.
• Determine your exit point after the DeM crosses and drops below the &#;&#; upper limit line and is followed by the EMA &#;red&#; line fully penetrating a candlestick.

Steps &#;2&#; and &#;3&#; represent risk and money management techniques, which should not be overlooked. This simple trading system would have yielded two profitable trades of 50 and 40 pips, respectively, but do remember that no trading strategy will deliver positive results all of the time. Your objective as a forex trader is to achieve consistency, and hopefully, DeMarker Technical Analysis will provide positive net gains when employed with other indicator support.

The Best Forex Demo Accounts

To master the Alligator trading strategy it is important that you practice it. Reading the signals the indicator correctly timing your entry and exit points are skills that need to be mastered in order to maximise your profits. This is where a forex demo account comes in: It allows you to practice your new strategy without risking any of your hard-won capital. Below we have picked out some of our favourite forex demo accounts to help you out.

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Example of a DeMarker Indicator strategy trade

Let&#;s look at a current real-time trading example using the DeMarker strategy. The example focuses on the 4-hour timeframe for the EUR/GBP currency pair. As with the above examples, we have added Bollinger Bands (Green) and a period EMA (Red). The DeMarker is shown in the separate indicator box at the bottom of the chart.

In this example, the &#;EUR/GBP&#; currency pair fluctuates wildly over ten days. An aggressive swing trader might enter the market earlier, but we have picked an entry point where the DeM has crossed the level, and the two moving averages have confirmed an uptrend where the first set of Green circles are displayed. The DeM shifted swiftly as expected but soon made a slight dip. We ignored that movement since the moving averages did not cross.

The second set of Green circles represents the exit and new entry points. Once again, a dip below in the DeM is confirmed by the moving averages. The DeM travels below and stays there, a sign to hold onto the trade and wait for an optimum closing point. That point is soon realised when the DeM moves upward and crosses the threshold. The moving averages once again confirmed the exit point.

If you had followed this simple DeMarker trading strategy, you could have netted two trades for roughly pips apiece, for a total net gain of some pips, an excellent result. This trading example was for informational purposes only. The DeM indicator will not always yield such favourable outcomes, but this example illustrates the power of this tool when used in conjunction with other indicators. The setups are straightforward, but every trading opportunity may not work out as well as this one. Practice using the DeMarker indicator and incorporate it into your daily routine. It is worth your consideration.

Conclusion

Several Thomas DeMark indicators exist, but the DeMarker is the best known of his many creations in the retail forex trading community. MetaTrader4 trading platforms include this indicator, but several very well-known proprietary broker platforms choose to bypass this clever tool. Perhaps, the calculations put too much stress on basic software routines, but if it gains the popularity it deserves, it might be easier to find support for its use.

Most oscillating indicators tend to be lagging, but as demonstrated, the DeM has a unique ability to predict reversals in market pricing behaviour. It is not correct in every situation. False positives can occur, but the odds can favour the trader when it is used in combination with other indicators. Practice sessions will help you see this technical tool&#;s subtleties and incorporate it into a successful trading strategy. Veteran traders swear by their practice regimens, and you will, too, especially when the DeM works to your benefit.

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Developed by Thomas DeMark, the DeMarker I indicator attempts to measure demand of a trading instrument by comparing the high and low prices of the current bar with the high and low prices of the prior bar. This way it helps to identify potential price peaks and bottoms. The DeMarker I is meant to overcome the common shortcomings of traditional indicators, that identify overbought and oversold conditions.

The DeMarker I is comprised by two indicators &#; DeMax and DeMin. DeMax compares the high price of the current bar with the high price of the prior bar. DeMin compares the low price of the current bar with the low price of the prior bar.

The DeMarker indicator fluctuates between and + and can generate various signals:

First, it is used in order to identify overbought and oversold conditions. In this case it functions in a similar way to the Relative Strength Index (RSI) and uses the same extreme levels (30 for oversold and 70 for overbought).

Second, looking for bullish or bearish divergences between the DeMarker and the price of the trading instrument, just like the case with traditional overbought/oversold indicators.

Third, drawing trendlines between peaks and bottoms, which are formed by the DeMarker. Trading signals, in this case, are generated as the indicator breaches above or below the trendlines.

Chart Source: VT Trader