The DeMarker indicator or the “Demark” oscillator
Description of the DeMarker indicator
The DeMarker indicator is an oscillator indicator of technical analysis. Oscillator DeMarker is used to work in any financial markets, including Forex. To calculate it, the extremes (high and low prices) of the current and previous candles are compared. The DeMarker indicator is included in the standard equipment of MetaTrader trading terminals of all generations.
If there is a positive difference in the High extremum between the last two candles, the indicator increases its value. Moreover, if the difference is absent or negative, the indicator does not change. The same goes for Low extremes. If the current Low is greater than or equal to the previous one, the indicator does not change.
Please note – in calculations of the indicator line value, the desired number (value) cannot be negative. The indicator value is always greater than or equal to zero.
The indicator line is the ratio, where the numerator is the simple average difference of the High values, and the denominator is the numerator plus the average of the Low difference.
The formula for calculating the DeMarker indicator
For calculation, we set the time interval n:
We consider max: if HIGH (n)> HIGH (n-1), then DeMax (n) = HIGH (n) -HIGH (n-1), otherwise DeMax (n) = 0.
Count min: if LOW (n)
We consider the value of the resulting line: DeM = SMA (DeMax, N) / (SMA (DeMax, N) + SMA (DeMin, N))
HIGH (n) – High of the last candle;
LOW (n) – Low of the last candle;
HIGH (n-1) – High of the penultimate candle;
LOW (n-1) – Low of the penultimate candle;
SMA – moving average;
N is the period.
Trading strategy based on DeMarker indicator
Like all oscillators, this one is designed to work in the trendless phase of the market. The “overbought” and “oversold” zones of 30% and 70%, respectively, are cut off on the indicator window. When the indicator line enters the oversold zone, that is, the indicator value becomes less than 30% – this is a signal for a quick market turn, that is, for a purchase. Conversely, when the indicator is in the overbought zone, then it is worth considering deals for sale.
Files for downloading by the DeMarker indicator
The DeMarker indicator for MT4 can be downloaded here
The DeMarker indicator for MT5 can be downloaded here
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