Many trading tools use mathematical calculations. With their help, indicators for technical indicators are calculated, levels, the possibility of making profit and minimizing losses are calculated, and they are also used in Money Management.
One such tool is the Demarker indicator. It can be used in various trading options: at Forex, in binary options, at the commodity, commodity and stock markets. This is a universal tool that is used in trading by many professional traders, and experts - to predict changes in market quotes.
Description of the Demarker indicator
This quite famous tool among traders was developed and created by Thomas Demark, one of the founders of the financial market. It is presented in the form of a line showing the overbought and oversold zones of the market. The technical indicator, like many other classic tools, is on all trading floors popular with traders: MetaTrader, Thinkorswim and in the "live chart". It belongs to the class of oscillators and has all the corresponding characteristics inherent in this type.
The mathematical formula is presented in the photo.
Where:
- High (i) - maximum of the last or current candle / bar;
- High (i-1) - maximum of the previous candle / bar;
- N is the time period for the calculation;
- Low (i) - minimum of the last or current candle / bar;
- Low (i-1) - previous minimum of the candle / bar;
- SMA - Moving Average indicator.
The formula is quite simple and understandable, but in order not to constantly perform all these calculations, Demark developed a special technical indicator and called it by his name. This greatly simplified the task for traders, since all calculations occur automatically, and they do not have to carry out calculations on their own, which significantly reduces the time during forecasting and market analysis.
To use the Demark indicator in trading, it is enough to simply install it on the chart, and the line that defines the overbought and oversold zones of the market will be built continuously. For the convenience of traders, in order not to close the price chart, this tool is installed in a separate window.
Indicator Value:
- from 0 to 0.3 - oversold zone;
- from 0.3 to 0.7 - uncertainty or neutrality;
- from 0.7 to 1 - overbought zone.
The levels of 0.3 and 0.7 are significant indicators and determine the current state of the market and what changes may occur in a given time period in the future.
Technical Indicator Functions
The purpose of this tool is to determine the maximum and minimum market values using supply and demand for trading assets. The description of the Demarker indicator also indicates that it identifies financial risks for the sale and purchase in real time.
Indicator Functions:
- Identification of overbought and oversold areas of the market.
- Identification of local highs and lows of quotes.
In addition, significant levels of the Demark indicator (0.3 and 0.7) show market reversals or tipping points, such as market price pullbacks during long-term trends and impulses.
Application area
This versatile tool can be used in various trading strategies both at Forex and in binary options, as well as in the stock market. On its basis, traders have developed dozens of techniques that, when used correctly, bring them good profit.
Overbought and oversold zones are the most important characteristics in trading. Experts who analyze the financial market, its fluctuations, movements and changes use the Demarker indicator to understand which market is in the mood and who has more of it - sellers or buyers, and also make market quotes based on this tool. Traders, using analytical data from this technical indicator, open trades and make a profit.
Tool settings and options
We can say that this indicator is installed literally in one click. It does not require any additional settings, you can use the recommended parameters from the developers.
To set the indicator on the chart, just select this tool in the list. For example, you can consider the settings in MetaTrader:
- Go to the "Insert" section.
- Select "Tools" and find the Demarker indicator ("Oscillators" -> DeMarker), after which a window with settings will open.
- In the "Parameters" section, you must leave the initial value - 14. You can choose any style: blue, green, black, brown, the one that the trader likes.
- Display leave "Line".
- Check the box with a value of 0 in the section “Fix minimum” and 1 in “Maximum”. After these steps, you must confirm the selected settings and click "OK". No further action is required.
If a trading strategy requires the use of additional levels, then they can also be set in the indicator settings in the "Levels" section.
Trading with Demarker
In trading on the financial market, this technical indicator is quite popular among traders. First of all, this is due to the fact that it perfectly shows divergence and gives signals for opening positions.
Divergence is the discrepancy between the values of indicators on the chart and in the indicator. For example, a trader drew a trend line along the tops of the candles and revealed that in the future the movement will have an upward direction. However, the indicator shows the opposite value. Consequently, there is divergence in the analysis of market quotes. Such a phenomenon in trading with most traders is desirable, since in more than 90% it is justified and the speculator makes a profit.
Important: to open a position, you need to choose indicators of the direction of the indicator, not market prices, since residual impulses that no longer correspond to the market mood and cause divergence with the indicator can be shown on the chart.
To understand how to use the Demark indicator, you need to familiarize yourself with the rules of work for this tool.
Application of the indicator in trading:
- Define a global trend.
- Analyze indicator indicators.
- With values from 0 to 0.3 (oversold zone) and a pronounced upward market orientation, open a buy deal.
- If the indicator has values from 1 to 0.7 (overbought zone), and market quotes are directed downwards - for sale.
To confirm signals and filter them, you must use additional tools, for example, the Moving Average indicator.
Trading Strategy Using Demarker
Before you start trading, you need to prepare.
To do this, install on the chart:
- Indicator Demarker.
- SMA, Moving Average.
- Timeframe - 15 minute chart.
- Currency pair - euro / dollar.
Trading Rules:
- To open a buy position, you need to wait until the Demark indicator starts to leave the oversold zone. The "moving average" should be directed upwards, as a confirmation of the signal, and the indicator itself should have a value from 0 to 0.3.
- The Stop-Loss protective order must be set at 15 points (below the open order).
- Take Profit can not be set or set the value as desired. If it is not used, then close the position in manual mode. Typically, Take Profit is set at least twice the value of Stop Loss.
- To open a sell position, you need to make sure that the indicator leaves the overbought zone and has a downward direction. Confirmation SMA must point down. The indicator values range from 1 to 0.7.
- Stop Loss is set 15 points above the open order.
- Take Profit at the request of the trader.
This trading strategy with the Demarker indicator is quite simple to understand and therefore suitable for beginners. It has good results and allows you to earn in the financial markets. The main thing is not to rush and use it correctly.
Application of Demarker in binary options
This universal tool can be used in the financial market in any direction of trade. The Demarker indicator for binary options is absolutely no different from Forex tools and has the same settings.
Its use in binary options occurs similarly: at values from 0 to 0.3, the Call option is bought, while market quotes should be directed upwards, that is, leave the overbought zone.
To buy a Put option, it must have a value from 1 to 0.7, that is, leave the oversold zone and have a downward direction.
Tool Benefits
Many traders who use the Demarker tool in trading, consider it indispensable. The opinion that this super indicator in binary options is the Grail is, of course, exaggerated.
The advantages include automated indicator, determination of overbought and oversold zones, as well as the ability to find divergence with its help.
When used correctly, traders have stable positive results.
Negative sides
This tool does not have any major flaws. However, there is a category of traders who, using it, receive losses. This is due to several factors:
- opening deals in neutral zones when the indicator has a value from 0.3 to 0.7;
- traders open positions without confirmation and filtering false signals;
- haste.
No need to rush, the market is constantly on the move, and more than one century, so you can always have time to open a deal. The main condition when working with this indicator is to wait for a signal from it and use filters that filter out noise and interference that periodically occur in the market, especially on small timeframes.
Trading tools for binary options
Working with binary contracts has its own characteristics. The fact is that in order to earn money in this type of trading, you must be able to accurately predict changes in market movements, taking into account a certain time range. Therefore, for traders, experts and professionals have developed special tools and trading strategies. Popular tools for binary options:
- Technical indicators.
- Trading signals.
- Copying deals.
- Automated programs.
Trading binary contracts is quite simple when the market is in a calm state, that is, in the consolidation zone, and the situation is much more difficult during strong movements. Therefore, they use special tools in trading - binary options trend indicators, which allow them to determine the direction of movement with a higher probability.
Trading signals and automated programs such as robots and experts are ready-made analytical solutions, and the trader always has a choice: to follow them or not.
Copying deals is a tool that allows you to copy deals from successful traders.
Professionals advise beginners to always pre-independently conduct a forecast of market movement and only then listen to various recommendations and make decisions to open a position.
Conclusion
The Demarker indicator is a technical tool that allows traders, when used correctly, to earn money in the financial markets. It is a universal indicator for various types of trading and forms the basis of many strategies. Experts and traders have been using it for decades, both in trading and in analytics. This is a fairly popular and well-known tool for trading.