DeMarker System Strategy

The DeMarker Indicator was invented and described by Thomas DeMark.

The basic principle is this: the intraday high of the current day is compared to the intraday high of the previous day. If the intraday maximum of the current day is higher, the corresponding difference is recorded. A zero value is recorded if the intraday maximum is less than or equal to the previous day's intraday maximum. Then the differences obtained in this way are summed. This value becomes the numerator of the indicator, which is divided by the same value plus the sum of differences between the price minima of the previous and current days.

When the indicator is below its lower level – the price may reverse UP. When the indicator is above its upper level – the price may reverse DOWN.

Strategy Setups

Instruments: any

Indicators: DeMarker, Parabolic SAR

Settings: change the DeMarker levels to 0.2 and 0.8.

Timeframe: >30M

Rules for a long entry

Wait for the DeMarker line to break its LOWER line and return to the working zone.
Parabolic SAR should start rising, or at least should form the last point of the bearish trend.

It is recommended that you use the stop-loss at the nearest local minimum level before receiving the signal.

For example, we open a long position in GBPUSD at 1.20880 when the Parabolic SAR indicator starts moving UP, and simultaneously, the DeMarker line crosses its lower line. The stop-loss is at the lowest low – at 1.18412.

We keep holding the trade until the Parabolic SAR changes its direction and starts falling – at 1.23175.

We make 2295 points of profit.

GBPUSD, long position

Rules for a short entry

Wait for the DeMarker line to break its UPPER line and return to the working zone.
Parabolic SAR should start falling, or at least should form the last point of the bullish trend.

It is recommended that you use the stop-loss at the nearest local maximum level before receiving the signal.

We open a short position in GBPUSD at 1.40013 when the Parabolic SAR indicator starts moving DOWN, and simultaneously, the DeMarker line crosses its upper line. The stop-loss is at the highest high – 1.41829.

We keep holding the trade until the Parabolic SAR changes its direction and starts rising – at 1.38366.

We make 1647 points of profit.

GBPUSD, short position

How to choose the take-profit level

Choose your take-profit level based on the ratio 3:1, i.e. the trade should bring 3 points of profit for one lost profit point.

Another way to choose a take-profit level is to check the Parabolic SAR. If the indicator starts changing direction, it’s time to close positions.

Important remarks

It’s essential to note that the strategy only works with trends. When there is a flat in the market, this strategy may give a lot of false signals.

Trade with FBS using the DeMarker Indicator and Parabolic SAR to make stable profits.

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