Demarker: How to analyze the market using Demarker indicator

By QuintoTrader | Quinto Trader | 17 Sep 2019


Demarker indicator was created by Thomas Demark with the main objective of making it  an oscillator trading indicator  based on the current maximum and minimum prices to the previous periods  price. Demark wanted his indicator to be used  to measure the demand of underlying securities. As a tool for measuring demand of underline securities, demarker is based on two components, that is;

  • Demax which compares the current high to the previous  high
  • Demin which compares the current low to the previous  low

According to Demark, the value of the intervals  of the two components above is therefore calculated as follows;

 

for Demax we have;

 if  current High >previous High then we have the following;

 

Demax= Current High-previous High

 

if otherwise then we have

 

Demax=0

 

have;for Demin we have;

if current low<previous low then we have the following formula;

Demin(i)= previous low-current low

if otherwise then we have;

Demin=0

According to Thomas Demark, Demarker indicator has its intervals oscillation at between 0.3 to 0.7.When the demarker curve is between 0.3 to 0.7,then the trader is not at any risk while in the market.At that range,the trader can continue to be in the market no matter the direction in which they entered the market.If the demarker curve falls below 0.3,that is an indicator that the market will reverse to bullish thus the trader should close any sell position and enter a buy position since the market will start moving upwards while when the demarker curve rises above 0.7 then that is an indicator that the market will reverse to bearish thus the trader should close any buy position and enter a sell position since the market will start moving downwards.This is indicated from the candle stick chart below;

 

 MetaTrader%2BWeb%2BTerminal%25281%2529.png

From the candle stick chart above,the first two joining arrows represent the oscillation points of the demarker indicator while the last two joining arrows represent the demarker indicator curve.

At point A ,the demarker has fallen below 0.3 thus an indication of oversold in the market.This oversold in the market will result to reversal of the market from bearish to bullish thus signaling the trader to close any sell position and enter a buy position since the market will start moving upwards.

At point B ,the demarker has risen above 0.7 thus an indication of an overbought in the market.This overbought in the market will result to reversal of the market from bullish to bearish thus signaling the trader to close any buy position and enter a sell position since the market will start moving downwards.


Recommendation: If you are a day trader,just use 1 min,5 min,15 min and 30 min time frame while if you are a swing trader just use 1 hour and above time frame if you want Demarker trading indicator to work well for you.

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QuintoTrader
QuintoTrader

Trader, Blockchain Technologist and Contentpreneur. Also founder and CEO @ Quinto Trader


Quinto Trader
Quinto Trader

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