What the DeMarker Measures
Most oscillators — RSI included — are built from closing prices. The DeMarker takes a different route: it compares each bar's high to the previous bar's high, and each bar's low to the previous bar's low. The logic: when buyers are genuinely in control, they keep achieving higher highs; when that stops happening bar after bar, demand is exhausting even if closes still look fine. The DeMarker turns that intuition into a number.
The calculation (for the curious)
- DeMax = today's high − yesterday's high, when positive (otherwise 0)
- DeMin = yesterday's low − today's low, when positive (otherwise 0)
- DeM = average(DeMax, n) ÷ [average(DeMax, n) + average(DeMin, n)], with n = 14 by default
The result lives between 0 and 1 (some platforms scale it 0–100). Near 1, recent range expansion has been almost all upward — buyers stretched. Near 0, almost all downward — sellers stretched. The conventional lines are 0.70 (overbought) and 0.30 (oversold).
DeMarker vs RSI: The Real Difference
| DeMarker | RSI | |
|---|---|---|
| Built from | Bar-to-bar highs and lows | Bar-to-bar closes |
| Question asked | Is the push for new highs/lows exhausting? | How strong have recent closes been, net? |
| Standard levels | 0.30 / 0.70 | 30 / 70 |
| Character | Sensitive to range expansion & failed pushes | Smoother, close-driven |
In practice the two often agree — but the disagreements are the interesting part. A market drifting up on shrinking highs can hold a neutral RSI while the DeMarker rolls over, flagging that the advance itself is running out of participants. Neither is 'better'; they're different sensors. We reach for DeM because exhaustion-of-push is exactly what you want to detect at the end of a pullback.
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How to Actually Trade With It
The costly way to use any oscillator is standalone reversal-calling — shorting every 0.70 in a strong uptrend is a donation, because trends can hold stretched readings for weeks. The professional pattern inverts it: the trend picks the direction, the DeMarker picks the moment.
- Establish the trend first — we use EMA alignment on the daily chart. Uptrend = longs only.
- Wait for the pullback to drag the DeMarker down toward or below 0.30. In an uptrend, that's selling pressure exhausting at a discount — the sale rack, not the fire alarm.
- Enter on the turn back up — DeM hooking up from the oversold zone while price holds the pullback level, ideally confirmed on the daily or 4-hour candle. Stop beyond the swing low, target at the next structure, risk per the 1% rule.
Mirror everything for downtrends: DeM pushing above 0.70 on a rally inside a daily downtrend is the short entry window, on the turn back down.
The bonus signal: divergence
When price prints a new high but the DeMarker prints a lower high, the push is being achieved by fewer, weaker hands — worth treating as a caution light on longs and a reason to tighten stops, though never as a standalone short signal.
Settings and Practical Notes
- Period 14 is the standard default and the sensible starting point; shorter periods add signals and noise in equal measure.
- Set alert lines at 0.30 / 0.70. The indicator ships built-in on MetaTrader 4/5 (listed as 'DeMarker') and is available on TradingView — no custom code needed.
- Judge it on the decision timeframe. A daily-chart process reads the daily DeM; dipping to lower-timeframe DeM readings mid-trade reintroduces exactly the noise the daily filters out.
- It's a gate, not a grail. In our 3-Gate process the DeM is gate two of three: trend must already agree, and no reading — however stretched — overrides risk sizing. That's the shape of every durable indicator strategy: each tool gets a veto, none gets a vote alone.
If you want to watch the DeMarker applied to live markets — which levels we're stalking and what the momentum gate says about them — that's precisely what the free weekly newsletter walks through, chart by chart.