De-Marker-Trading-Indicator - Killer Methods to Trade the DeMarker - tradingkiller
 

Killer Methods to Trade the DeMarker Indicator

Added 3/5/2012

The DeMarker Indicator FX indicator is a well-known Forex indicator that was made by the legendary technical analyst Thomas DeMark and published in his book 'Science of Technical Analysis'. This technical indicator is still used every day by dozens of traders worldwide and it still generates very accurate entries. This article will describe how to trade the DeMarker Indicator for great pips in Forex, Stocks and commodities.

The DeMarker is an overbought\oversold indicator that analysis the location of price in relation to previous period. When it is at its overbought values (60) is it a sign that risk is high and price will probably go down, and when it is at ovesold value (40) it shows that price is at low and about to rise up again. It is recommended to confirm these signals by price-action, to confirm that the price is on a support or a resistance level - so trades will be more accurate

One trading tactic of trading the DeMarker is by trading crosses of the overbought\oversold levels. When this index crosses the overbought level (60) downwards it is a sign that the uptrend is at its end and it is the time to sell. When the DeMarker index touches the oversold level (40) upwards it is a buy signal and a sign that a bullish trend is about to begin. This trading method is very strong and can generate very interesting reversal signals. It is highly recommended to use the Bollinger Bands as well to confirm these signals and make sure they are placed at support and resistance levels (lower and upper bands of Bollinger, respectively). Another advantage of this technique is the fact that its signals have very tight stop loss so your risk is minimized.

The higher the period value, the less sensitive the DeMarker indicator will be, and you will be able to identify long-term movements and signals that are more prominent as opposed to short-term movements. The DeMarker indicator also has built-in smoothing so its values are a bit smoother than the Stochastic indicator.

We suggest placing the stop loss 2 pip below the lowest low of last 5 candles (for short trades), and 2 pip above the highest high of last 5 bars (for long\trades), so your risk is minimized and the reward is very high. This technique works exceptionally well with the overbought\oversold trading method as it is a ranging trading method. As usual, it is recommended not to risk more than 1-2% of your capital or equity on any single trade, this is standard money management rules that can be used regardless of the actual system you trade.

In conclusion, the DeMarker is a strong indicator that generated profits for more than 20 years and may continue to profit this way in the future. Learn to use and master this technical indicator, as it can highly optimize your trading and accuracy, and supercharge your trading performance. It is also recommended to look into the works of Thomas Demark as his indicators and analysis techniques are very strong and can highly improve your trading.

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