Tom DeMark is a trader and a consultant who has developed dozens of proprietary technical indicators over the years and depends solely on technical principles of the market for his developments and trading. It would be wise to mention here that at some point, DeMark went through the CFA program (certified financial analyst) but never completed it. In his word DeMark explained that "Markets over the long term are controlled by fundamentals. But, my indicators measure psychology--that's what technical analysis does.”

DeMarkter Indicator is a technical indicator that describes the most recent price action in relation to the past periods’ price in a view to quantify the demand of the underlying asset. This indicator when employed can be used by investors in identifying market tops and bottoms as well as exhaustion in price action. Looking at this indicator critically you’ll notice that it does not use smoothed data and is bounded between -100 and +100. The DeMarker Indicator is a technical tool developed by Tom Demarker to identify very risky buying and selling segments of the market.

If I must mention here, the DeMarker indicator does not filter data but it is vital in the detection of new entry and exit opportunities. We have two variants for the DeMarker indicator but their function is the similar. The First indicator is bounded by value from -100 to 100, the other by values from 0 to 1.

If you apply the DeMarker Indicator for the 0 to 1 variant, you’ll notice that readings above 0.7 shows a bearish reversal or retraction whilst that below 0.3 signals a possible market bottom. When the values fall between 0.3 and 0.7, it is a range trading territory. This little tip can help you determine buying and selling signals. DeMarker’s Indicator has succeeded in gaining a positive reputation for buy/sell signals under any market conditions.

Using the DeMarker Indicator in knowing when breakouts or fake outs are achieved makes it an effective tool for this purpose rather than its rivals. The mathematical formula behind the DI allows it detect real price reversals which it is able to do during intra-day trading and beyond. We know that DeMarker Indicator estimates the difference between the current price value and the past price value. The workings allow the value to be recorded if it is positive or zeroed if otherwise. The whole values over a defined period are added together and divided by the lowest price value recorded.

DeMark’s findings shows that his indicator prove their worth in forecasting price reversals, such as tops and bottoms, better than competing indicators who are merely price followers. Demarker indicator is so popular among investors such that they even rely solely on them on for signals about possible new trade opportunities.