The DeMarker (DeM) is a technical indicator or another member of the so-called Oscillator family. It was developed and designed by Tom Demarker, aiming to measure the demand for the underlying currency pair. The DeM indicator relates recent price action to recently closed prices. Market investors use the index to define the overbought and oversold conditions, assess risk levels, and time when price exhaustion is imminent.
The DeM indicator is usually used on Metatrader4 trading software, and its basic formula is calculated by the following few steps:
- Choose a predetermined period X
- Calculate DeMax = High – Previous High if >0, otherwise DeMax = 0
- Calculate DeMin = Previous Low – Low if >0, otherwise DeMin = 0
- DeM = MA of DeMax/(MA of DeMax + MA of DeMin)
The DeM indicator consists of a single fluctuating curve. Experts recommend the use of addiotional exponential moving average, in order to enhance the value of the trading signals.
The DeMarker indicator may pick major bottoms better than tops. A shorter period setting will create a more sensitive indicator, but will also increase choppiness and the potential for increased false signals.