What is DeMarker Indicator?
History of DeMarker Indicator
The DeMarker indicator is a free indicator which can be found in most charting software such as MT4 and PPro8. The indicator is one of the 30+ indicators which Tom DeMark has developed. Other indicators within the family include Camouflage, Differential, Channel 1 to 3, Arc, and Double Point. Tom is one of the best-known traders of our time and many Wall Street professionals use his eponymous consultancy firm. For most trading sites, the DeMarker indicator is located in the oscillators segment.
DeMarker Trading Strategy
The DeMarker indicator consists of a single curve fluctuating and does not use smooth details. The predetermined duration for the indicator calculation is 14 times. When the number of phase build-ups, the indicator curve turns out to be charming. Equally, with a smaller number of periods, the curve happens to be more receptive. This oscillator is restricted to zero and one values, and has a root worth of 0.5, even though some of the indicator variants have a scale of 100 to -100. Typically, the indicator has lines drawn at both the values 0.30 and 0.70 as warning signals that a price turn is imminent. Values above boundary are considered riskier and volatile, and values within indicates low risk. Values above 0.60 are generally indicative of lower volatility and risk, while reading below 0.40 is a sign that risks are increasing. Conditions that are overbought and oversold are likely to be imminent when the curve goes beyond those boundary lines.
How to use DeMarker Indicator
Application of DeMarker in Trade Strategy
The DeMarker indicator’s main drawback is a large number of the fictitious indications in a different direction. Especially when there is a solid pattern on the market at the same time. The DeM indicator filters market noise. The systems that make use of the Stochastic standard as an extra tool are regarded as more stable. When the DeMarker is with any other indicators excellent leading signals can be obtained and most of the false points can be erased.
Technical Analysis of DeMarker Indicator
Without the demark metrics, technological research as we know it today will not be the same. These are not just words, but an acknowledgment of one of the most talented trader in technical analysis. Technical traders utilize past patterns to project future price levels. Or, on the left side of the chart, they use information to project levels on the right side of it. The Demark indicators for studying technical analysis show trends as well as conditions for reversal. It also helps traders find potential breakouts on both lower and larger timescales.
Things to Note about DeMarker Indicator
The DeMarker indicator is a good way to spot trends and to be made aware of the posibilities of buying and selling points in a varied market. Spotting buy points in an uptrend is better than selling points in a downtrend. It may stay in the overbought and over-sold zones for some time in a strongly trending market, greatly reducing its utility. Like any technological indicator, is useful on its own, it is best paired with other indicators to validate its signals.
Calculation of DeMarker
if high(n) > high(n-1), then
DeMax(n) = high(n)-high(n-1), otherwise
DeMax(n) = 0; DeMax(n):
if low(n) < low(n-1), then
DeMin(n) = low(n)-low(n), otherwise
DeMin(n) = 0;
Afterwards, the significance of DeMarker is analyzed:
DMark(n) = SMA (DeMax, n)/(SMA(DeMax, n) + SMA(DeMin, n)); SMA(DeMin, n);