Master The DeMarker Indicator With Amibroker Data Feed!

DeMarker indicators are used by technical analysts to identify a potential top, bottom, and exhaustion level of the market. With the correctness of the amibroker data feed, it becomes very effective for making the correct trading decision. Here’s a guide to the DeMarker Indicator, its applications, and how well it works with Amibroker.

How DeMarker Works:

The DeMarker indicator uses the relationship between the current period’s high and the previous period’s high to measure the price action in terms of a buying or selling pressure condition. It operates on a scale of 0-1, and generally, an overbought condition ranges between 0.7 and an oversold position between 0.3.

• Overbought condition: Values above 0.7 indicate that there is a possibility that a top is approaching. Reversal or correction signals may be given at these levels.
• Overbought Condition: Levels at or below 0.3 may signify that the market is closing in on a low, and thus can be viewed as an investment opportunity.

While most indicators are reliant on closing values, this indicator is primarily based upon intraday moves of price, which help to significantly distinguish changes in market momentum.

Benefits of Trading with DeMarker Indicator having Amibroker Data Feed:

The integration of the DeMarker Indicator with the amibroker data feed enables real-time insights that give traders correct and timely information. Here are some key advantages:

• Increased Accuracy: High-quality data by the amibroker data feed reduces errors from delayed or inaccurate data in the calculation.
• Customized Analysis: Traders in Amibroker can change the lookback period and the overbought/oversold levels to match the specific trading strategy.
• Compatibility with Other Indicators: The DeMarker Indicator is combined with moving averages, trend lines, and other oscillators in Amibroker to create an ultimate trading strategy.
• Automation and Alerts: Configure the auto-alerts in Amibroker so that every time you get a crossing on major levels, you will have the chance to take active steps in trading.

Trading Strategies with the DeMarker Indicator:

1. Trend Reversal Strategy: 

• A possible signal for a bearish reversal is when values appear above 0.7.
• Search for a value below 0.3 as a bullish reversal indicator.
• Confirm the above signal using other indicators, say MACD or RSI, to make them perfect.

2. Detection of divergence:

• Bullish divergence: If the price has managed to create lower lows yet the DeMarker created a higher low, there can be a possibility that a bullish reversal is being signaled.

• Bearish Divergence: This occurs when the price sets higher highs but the DeMarker makes lower highs; this could be a reversal signal to the bear.

3. Breakout Confirmation:

• To confirm breakout trades, make use of the DeMarker Indicator. A breakout may be accompanied by an increased value of the DeM. It would mean significant buying impulses.

Optimizing DeMarker Indicator with Amibroker:

1. Formula Customization:

• Synch up your strategies by customizing the DeMarker Indicator in Amibroker using AFL, which stands for Amibroker Formula Language. As an example, merge the DeMarker signals with the analysis of volume to confirm this trade.

2. Testing Strategies:

• Apply the powerful back-testing tools of Amibroker to test the performance of the DeMarker Indicator in different market conditions.

3. Multi-Timeframe Analysis:

• Analyze the DeMarker values on multiple timeframes in Amibroker to provide a more comprehensive view of the market trends.

4. Real-time Updates with Amibroker Data Feed:

• The amibroker data feed integrates very smoothly, and DeMarker values are updated in real-time, which gives accurate signals during live trading.

Common Mistakes and Tips for Proper Usage:

1. Avoid Over-Reliance:

• The DeMarker Indicator is excellent but makes sense only as a complementary tool to confirm with others.

2. Adjust periods based on Volatility:

• The more negative look-back periods signal earlier but cause too many false alarms. Longer look-back periods are smoother but then lagging.

3. Watch for Critical Levels:

• It is critical to track 0.7 and 0.3 levels. They correspond to the most frequent turns in a market condition.
• Utilize the DeMarker Indicator with trend analysis to verify that its signals are in line with the overall trend of the market.

Conclusion

The DeMarker Indicator is the best tool when combined with the amibroker data feed and can identify a market top, bottom, and potential trend reversal. It focuses on the intraday price movements; hence it gives insights into the markets that other oscillators miss. 

Using advanced features in Amibroker, the trader can fine-tune, back-test, and optimize their strategies to increase performance. This indicator can be used when detecting divergences, confirming breakouts, and analyzing momentum. For more details, click on our Facebook page.