Dem Indicator & Demark: Indicator Marker In Demarking Strategy

Forex Trading Guide: The DeM (DeMarker) Indicator Explained

Have you ever heard of the Dem indicator in trading?

Well, it is undoubtedly a great tool for spotting buy or sell opportunities in a diverse market. And you should use the Dem indicator strategy at least once in your trading journey.

In Beirman Capital's Indicator Introduction Series, today we will discuss the Dem Indicator, how to interpret and trade it, and the pros and cons of the style. We will also address some of the most frequently asked questions related to the DeMarker and other top indicators in trading. So, let's get started with a small introduction.

What is a Dem Indicator?

A Dem Indicator, popularly known as the DeMarker or DeMark indicator, is a widely used technical analysis tool. It compares the recent maximum and minimum prices to the high and low prices of the past period to provide key insights into the current trend.

The Demark indicator was developed by Thomas DeMark in 1980. It assists traders in identifying the current trend, overbought and oversold conditions, and trading divergence that ultimately helps traders in making buy and sell decisions.

DeMarker Indicator Formula

The formula consists of two components:

Maximum price: High - Previous High (if negative, use 0)

Minimum price: Previous Low - Low (if negative, use 0)

DeM Indicator = (High - Previous High) / [(High - Previous High) + (Previous Low - Low)] * 100

Note: If the difference is negative between the prices, you need to use zero in the calculation.

While the calculation might seem complex, you don't need to do it manually. The DEM indicator free download is available on platforms like MT4 and TradingView, where the software will perform the calculations for you.

DeMark Indicator Trading Strategies

A DeMarker indicator oscillates typically within the range of 0 to 1. However, depending on the Dem indicator settings or the platform, it can oscillate from -100 to +100.

Buy and Sell Interpretation:

• Above 0.70: Indicates strong bullishness – consider a buy position.
• Below 0.30: Indicates strong bearishness – consider a sell position.

Overbought and Oversold Conditions:

• Above 0.70: Market is overbought – potential shorting opportunity.
• Below 0.30: Market is oversold – potential buying opportunity.

Divergence:

• Bullish Divergence: Price makes a lower low, while Demarker makes a higher low – suggests a buy.
• Bearish Divergence: Price makes a higher high, while Demarker makes a lower high – suggests a sell.

How to Use the DeMarker Indicator Strategy

Select an Asset: Choose your trading instrument – currency pair, commodity, index, or stock.

Select Time Frame & Plot Indicator: Use platforms like MT4, MT5, or TradingView. Use the popular DeMark 13 indicator (period = 13).

Use Supporting Indicators: Combine DeMarker with tools like RSI, Fibonacci Retracement, Bollinger Bands, or EMA (available in MT4) to confirm signals.

Place Trades:

Go short above 0.70

Go long below 0.30

Always use a stop-loss and take-profit strategy

Pros of the DEM Indicator

Free Access: Available across various platforms like MT4, TradingView, and custom charting tools.

Compatibility: Works well with EMA, RSI, Fibonacci, and others.

Comprehensive Analysis: Identifies trends, reversals, overbought/oversold areas, and divergences.

Simplicity: Similar in interpretation to Relative Strength Index (RSI).

Cons of the DEM Indicator

Subjectivity: Can be interpreted differently by different traders.

False Signals: May mislead during highly volatile or ranging markets.

FAQs: Extended Insights for Traders

What is the most powerful MT4 indicator?

There is no single best, but the most powerful MT4 indicators include Bollinger Bands, Fibonacci Retracement, RSI, EMA, and the TD Sequential Indicator.

What is DeM indicator?

The DeM or DeMarker indicator is a momentum oscillator that helps identify potential tops and bottoms. It is a leading indicator, ideal for detecting trend reversals early.

What is the best leading indicator in MT4?

Top leading indicators in MT4 include DeMarker, Stochastic Oscillator, MACD (early settings), and TD Sequential.

Does MT4 have an EMA indicator?

Yes, MT4 has an EMA indicator (Exponential Moving Average), which can be accessed under the "Trend" section in the indicator list.

What is the most accurate indicator in forex?

Indicators like EMA, MACD, RSI, and DeMarker are considered highly accurate when used correctly with proper confirmation.

What is the most successful trading indicator?

The success of a trading indicator depends on strategy and context. However, the most widely used and successful ones include the DeMarker, EMA, Fibonacci, and RSI.

How do you use a DEMA indicator?

The DEMA (Double Exponential Moving Average) is used for trend following. It's smoother and reacts faster than the traditional EMA, making it effective for intraday and swing trading.

What is dem value?

The Dem value refers to the numerical output of the DeMarker indicator. Typically, values close to 1 suggest overbought, while those close to 0 suggest oversold.

What is the best setting for DeMarker?

The best setting for the DeMarker indicator is a period of 13. This is widely used for short to medium-term strategies, providing balanced sensitivity and noise reduction.

Wrapping Up

The DEM indicator is undoubtedly a great technical analysis tool for trading forex, stocks, indices, and more. Whether you're a short-term or long-term trader, it's easy to use and integrates well with other tools like EMA, Fibonacci, and RSI.

Despite some limitations like false signals or subjective interpretation, these can be mitigated with practice, confirmation indicators, and proper risk management.

Want to try the DEM trading strategy? Open a demo account with Beirman Capital and test diverse strategies with real-time data and support.

Ready to Level Up Your Technical Game? Dive Into PDF of the DEM Indicator – The Tool Smart Traders Trust