The DeMarker Indicator
Posted by Edward Dy on July 4th, 2008
Photo Credit: Petrick2008
In the technical analysis arena, we can make use of the DeMarker indicator for indentifying high-risk buying or selling areas within a particular market.
A couple of variants of the Demarker Indicator exist, one has a value ranging from -100 to 100, while the other’s value ranges from 0 to 1. The basic principle governing the Indicator is the equal in either case. If the high price for a particular period is more than the high during that of the previous period, the DeMax variable for that period is the difference between the highs; on the other hand, the DeMin variable for the period works in the same manner for the low prices. The Demarker Indicator is calculated as the moving average of DeMax divided by the total of the moving averages of DeMax and DeMin. The higher therefore the value of DeMax in relation to DeMin, the greater will be the value of the Demarker Indicator.
On the 0 to 1 scale of the Demarker Indicator, any value greater than .7 means that the price is likely to going to plunge, while a value that is anywhere lower than .3 means that the price will soon surge. Values between .3 and .7 mean that periods for entering a given asset market would be rendered relatively low-risk.
The usefulness therefore of the Demarker Indicator lies in determining when to enter a market, or when to buy or sell an asset in order to take advantage of probable price trends.
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