DeMarker Indicator

The DeMarker Indicator is an indicator used in technical analysis that compares the most recent price to the previous candle's price, attempting to measure whether there is substantial demand for the currency pair. The DeMarker indicator is most often used to identify if there is any chance of price exhaustion and therefore is often used to identify market tops and bottoms. This oscillator is normally bound between the -100 and +100 levels, and unlike many other oscillators, does not use smoothed or averaged data to give feedback.

Most technical traders will use this indicator as one method of identifying the riskiness of the current price levels in which they wish to buy or sell a currency pair. As a general rule, values above 60 are indicative of lower volatility – which means less risky, while readings below the 40 mark can be a sign that risk is increasing, and perhaps a sudden move is about to happen.

DeMarker is a less-known indicator, but is useful for certain styles of trading – such as trend following. It is not a directional indicator, rather one that simply warns a move could happen. The most common use of this indicator is in the stock market, for traders that are looking to “buy and hold” dividend paying stocks as it can help them identify companies that aren’t moving much, and as such can continue to pay a reliable percentage as dividend to the shareholders.

One use for this indicator is to watch for support and resistance breaks as the risk barometer increases in the DeMarker window. While this indicator isn’t the most common one you will see, it certainly has a lot of uses as not all traders are looking for extreme amounts of volatility. For example, scalpers might wish to look at the DeMarker on a higher time frame when they are getting ready to enter. If the risk is fairly low of an explosive move, it would only confirm that perhaps the market is in a favorable mood for scalping in the near-term.