Tom Demarker Indicator guideline

Demarker indicator for MT4 or also known as “DeM” is a type of oscillator indicator created by Tom Demarker, to measure the demand for the underlying asset. It does this by comparing the most recent maximum and minimum prices to the prior period’s equivalent price. This comparison aims to estimate the direction of the trend. Moreover, Forex traders use MT5 Demarker indicator to determine overbought and oversold conditions. Also to evaluate the levels of risk. In this course, we will provide you with all you need to know about the Demarker indicator for Tradingview and MetaTrader platforms.

Demarker Indicator

What is Demarket indicator ?

Demarker is a technical analysis tool available by default in MetaTrader platforms. It is used to predict Forex market behavior in the short-term based on the changes in intraday highs and lows. In addition, it helps traders to decide when to enter and exit the market. It can be extended to any time frame as it based on relative price data.

Demarker indicator

Demarker MT4 indicator displays in a separate window below the chart. It works with all types of currency pairs and timeframes. The default setting is 14  periods, but you can change it from the input tab to fit your fancies. However, using a long period make the indicator curve smoother. Otherwise, when using a short period of time the curve became more responsive.

How does it work ?

Demarker indicator for MT5 is an oscillator that shows a single curve ranges between 0 and 1. There is some variant of DeM that oscillates between 100 and -100. Moreover, the indicator has a base value of 0.5 and two lines that provide warning signals. One is drawn at 0.3 value and the other at 0.7 value. Therefore, when values exceed either boundary ([0.1] or [100, -100]) DeM tells that the Forex market is very volatile and considered riskier. Whereas, if values stay in between either boundary the indicator indicates that the market probably trading sideways, and it is not volatile and less risky.

However, values greater than 0.6 indicate lower volatility and risk. And values lower than 0.4 indicate that the risk is rising. There is a potential imminent overbought and oversold states when the DeM line crosses over these levels (boundaries). In other words, when values move above 0.7 or below 0.3, imply a more trending market. Moreover, the nearer the values to 0 or 1 the higher the volatility of the price since the Forex market is trading in an intense environment.

Demarker Indicator Formula

It is not obligatory to understand how Demarker indicator is calculated as it does the job automatically in your platform. But it is preferable to know that, to better understand how the indicator is work. Demarker Tradingview indicator is similar to RSI but it does not concentrate on closing values as the RSI does. Rather concentrates on intra-periods highs and lows. Therefore, it calculated as follow:
  1. Identify a period of time in which the indicator will perform the analysis. 14 days is the standard period.
  2. Calculate DeMMAX, which is the difference between the present high and the prior high over a number of n periods:
If high (n) > high (n-1), then DeMMAX (n) = high (n) – high (n-1), otherwise, DeMMAX (n) = 0

    3. Calculate DeMMIN, which is the difference between the present low and the prior low over a number of n periods:

       If low (n) < low (n-1), then DeMMIN (n ) = low (n-1) – low (n), otherwise, DeMMIN (n) = 0

    4. Calculate the DeMarker value: 

       DeMark (n) = SMA (DeMMAX , X) / [ SMA (DeMMAX, X) – SMA (DeMMIN,X) ]

Where:  

  • SMA: simple moving average
  • X: number of bars

How to trade with Demarker indicator ?

  • Trading overbought and oversold:

The overbought condition happens when the indicator exceeds 0.7 (70) level, and the oversold occurs when the indicator falls below 0.3 (30) level. Overbought signals that the price may begin to fall means that a bearish price reversal may occur, while oversold signals that the price may begin to go up means there is a potential bullish price reversal.

  • Trading divergences:

professional day traders use the Demarker MT4 indicator to catch divergences. Divergence is a situation where the price of a security and the indicator are moving differently. this situation is rare to occur. Also, it is recommended to combine diverse indicators to ensure divergence.

Download Demarker indicator for MT4 

Demarker MT4 indicator is an oscillator indicator available by default in MetaTrader 4 platform. It is unlike the other oscillators as it possesses a single line that oscillates between 0 and 1. However, if it exceeds this boundary the market is considered riskier, and if it stays within, it is considered less risky. This MT4 indicator generates values that allow you to determine the directional bias of the market.

Demarker indicator MT4

Download Demarker indicator for MT5

Demarker indicator for MT5 is a very useful tool to determine when to enter and exit in Metatrader 5. Moreover, it helps traders to determine overbought and oversold states. You can identify these states with the help of two lines. one put at 0.7 value and the other at 0.3 value. Therefore, when this MT5 indicator goes above 0.7 value, it is an overbought sign. Whereas if it moves below the 0.3 value it considers an oversold signal.

Demarker indicator MT5

Download Demarker indicator for Tradingview

Demarker indicator is a very simple Tradingview tool. It works well with all kinds of currency pairs and timeframes. This Tradingview indicator used by a lot of traders to identify the divergence in the market. you can use it also to determine when to buy and sell and different reversal signals.

Demarker indicator Tradingview

Conclusion

Demarker indicator for MetaTrader and Tradingview platforms used by beginner and professional forex traders as it is easy to use and understand. It provides sometimes false signals like any technical indicator, which is why it is recommended to use it with other oscillators to obtain accurate signals. DeM is very helpful for identifying overbought and oversold states, reversal, and entry and exit points. Also, it allows users to catch divergence in the market. Moreover, this indicator is available in MT4 and MT5 platforms as it is a standard indicator that belongs to the oscillator variety.