The Demarker Indicator (DeM) is a technical analysis tool developed by Tom Demarker to measure the demand of the underlying asset by comparing the most recent maximum and minimum prices to the equivalent price of the previous period. It can identify high-risk buying or selling areas in a given market.
The Demarker indicator has two variants, one is bounded between values of -100 and 100 and the other is bounded between values of 0 and 1. The basic principle of the indicator for both cases is the same. The DeMax variable in this period is the difference between two high prices when the high price in this certain period is higher than the previous high, and the DeMin variable in this period is the difference between two low prices, which works similarly. Therefore, Demarker Indicator is the calculation of the moving average of DeMax divided by the sum of the moving averages of DeMax and DeMin.
On the scale of 0 to 1, the base value is at 0.5. The indicator usually draws lines at 0.30 and 0.70 values to warn an imminent price turn, while values in between indicate a relatively low risk to enter the market.Thus, using Demarker Indicator, traders can easily determine when to enter a market, and when to buy or sell an asset to make a profit.