The DeMarker is one of the oscillators available on the Olymp Trade platform. Similar to other indicators, it identifies oversold and overbought areas on the market. The way of reading and using the DeM is, in fact, comparable to the other oscillators like CCI, RSI, or the Stochastic one.
Here, I want to show you how to configure the DeM indicator and how to use it during trading at Olymp Trade.
Configuring the DeMarker indicator on the Olymp Trade interface
Log into your Olymp Trade account, choose the asset, and set the chart for Japanese candlesticks first. Then, click on the indicator icon. A new window will open. Just scroll down to find oscillators. The DeMarker will be among them. Select it and it will appear on your chart.
The DeM oscillates between the values 0.3 and 0.7. The middle line 0.5 is also visible.
Now you can change the indicator’s parameters. Click the pen icon to do that. You can change the period, the color, and the width of the line.
How to trade with the DeMarker on the Olymp Trade platform
In the times of ranging market, the DeM oscillator will move around 0.5 value. There is no strong trend and it is best to observe the market and wait. You should take action when the DeM fluctuates beyond the values of 0.3 or 0.7.
So how do you trade? Well, there are several choices. You can enter a long position when the indicator’s line is nearing the 0.7 value. You may also open a short position once the DeM exceeds the 0.7 level because it means the downtrend is coming.
When the oscillator is approaching 0.3 value, it is a signal to place a sell position. But when it moves beyond 0.3, the uptrend is coming, and therefore, you should enter a buy trade.
This is a simple way to determine the direction of the forthcoming trend and trading along with it. If the DeM signals the uptrend, you place a long position. If it indicates the downtrend is on its way, enter a short position.
Pros and Cons of Using the DeMarker Indicator 📊
💡 The DeMarker Indicator can effectively identify potential overbought and oversold conditions.
💡 It can be used in conjunction with other trading strategies to validate trading signals.
💡 It is suitable for both novice and experienced traders.
💔 Like other technical indicators, the DeMarker Indicator may produce false signals during times of market volatility.
💔 It may not perform as effectively in a ranging market.
💔 Reliance on a single indicator can lead to poor trading decisions. It’s essential to use it in conjunction with other tools.
|Trading Scenarios||DeMarker Indicator Application|
|Trending Market||Can help identify potential trend reversal points.|
|Ranging Market||May not be as effective and could provide false signals.|
How to trade long-lasting positions using the DeMarket oscillator
Take a look at the exemplary chart above. It shows 3 consecutive winning trades based on the DeM indicator’s signals.
In the first situation, the DeMarker indicator was fluctuating below 0.3 value. Then it crossed 0.3 and moved forward 0.5. It was a signal for the upcoming uptrend and that is why I entered a 5-minute buy position.
The second situation is the opposite. The DeM exceeded the 0.7 value and after a time it had cut it and continued towards 0.5. The downtrend was coming so I entered a sell position.
And the third position is similar to the first one. The DeM was crossing 0.3 from below so I opened a buy position.
Now that you have an overview of the DeMarker indicator, go to your Olymp Trade demo account and check how it works. Leave a comment on your progress.
Best of luck!
Frequently Asked Questions🙋♂️
- 1. What is the main purpose of the DeMarker Indicator?
The DeMarker Indicator is used to identify potential overbought and oversold conditions in the market, helping traders to anticipate potential trend reversals.
- 2. Can the DeMarker Indicator be used alone to make trading decisions?
While the DeMarker Indicator is a valuable tool, it should not be used in isolation. It is most effective when used in conjunction with other technical analysis tools and strategies.
- 3. How does the DeMarker Indicator work in a ranging market?
In a ranging market, the DeMarker Indicator may not perform as effectively and could potentially produce false signals. It’s best used in trending markets.
- 4. Can novice traders use the DeMarker Indicator?
Absolutely. The DeMarker Indicator is straightforward to understand and use, making it suitable for both novice and experienced traders.
- 5. What should I do if the DeMarker Indicator gives a conflicting signal with other indicators?
If there is a conflict between the DeMarker Indicator and other indicators, it’s best to exercise caution. Consider the overall market conditions and your trading strategy before making a decision.
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