DeMarker (DeM)

A MetaTrader-default oscillator that compares successive highs and lows — not closes — on a 0-to-1 scale.

What it is

The DeMarker (DeM), attributed to Tom DeMark, is one of MetaTrader 4 and 5's default oscillators, which gives it enormous reach among forex traders despite thin English-language documentation. It measures directional pressure by comparing each bar's high to the previous bar's high and each bar's low to the previous bar's low — unlike RSI, CMO, or the Momentum indicator, it never looks at closing prices at all. The result is plotted on a 0-to-1 scale (some platforms rescale to 0–100) with conventional reference bands at 0.30 and 0.70. The exact MetaTrader formula is: DeMax = high − high[1] when the current high is greater, else 0; DeMin = low[1] − low when the current low is lower, else 0; DeM = SMA(DeMax, N) / (SMA(DeMax, N) + SMA(DeMin, N)), with N defaulting to 14. Because the smoothing is a simple moving average of these one-sided range extensions, the indicator reads as the share of recent bar-to-bar expansion that happened on the upside. Like every oscillator, DeM describes what recent bars did; it does not predict what price will do next. This is educational material, not financial advice, and trading always involves risk of loss.

How it works

On each bar, two quantities are computed. DeMax captures upward range extension: if the current high exceeds the previous high, DeMax equals that difference; otherwise it is zero. DeMin captures downward extension symmetrically: if the current low is below the previous low, DeMin equals the previous low minus the current low; otherwise zero. An inside bar — lower high and higher low — contributes zero to both. Both series are then smoothed with a simple moving average over N bars (14 by default in MetaTrader), and the DeMarker value is the smoothed DeMax divided by the sum of smoothed DeMax and smoothed DeMin. The structure is deliberately parallel to RSI — an 'up amount' normalized by total movement — but with two substantive differences: the inputs are high/low extensions rather than close-to-close changes, and the smoothing is a plain SMA rather than Wilder's running average. Using highs and lows means DeM responds to bars that probe new territory even when closes are flat, and ignores large close-to-close moves that stay inside the prior bar's range. The SMA smoothing means old bars drop out of the window abruptly, so the line can move because a large extension from N bars ago expired, not because of anything on the current bar.

How traders read it

• Scale: DeM runs from 0 to 1, with 0.5 meaning recent upward and downward range extensions were balanced. Readings near 1 mean nearly all recent bar-to-bar extension was upward; near 0, downward.
• 0.30 / 0.70 bands: the conventional bands mark stretched one-sided movement, often labeled 'oversold' and 'overbought' — descriptions of what recent bars did, not turning-point signals, and strong trends can hold beyond them for long stretches.
• Inside bars register as nothing: consecutive inside bars add zero to both sides, drifting the reading toward the balance of whatever older bars remain in the window.
• Versus RSI: DeM answers 'which direction were bars extending their range?' while RSI answers 'which direction were closes moving?' — the two can disagree, especially on charts with long wicks or flat closes.
• Divergence: price making a new high while DeM makes a lower high is sometimes read as upward range extension weakening; like all divergences it can persist without any reversal.
• Platform scale check: MetaTrader plots 0–1 with 0.3/0.7 lines; some ports rescale to 0–100 — confirm the scale before comparing values across platforms.

Common settings

Period 14 with bands at 0.30 and 0.70 is the MetaTrader default and by far the most common configuration. Shorter periods (such as 8–10) make the line reach the bands more often and whipsaw more; longer periods (such as 21–25) smooth it at the cost of responding later. There is no evidence that any particular setting is 'best' — changing the period changes every reading, so settings are something to test and understand, not assume.

Strengths

• Deterministic and simple: two comparisons and an SMA ratio, fully reproducible from the published MetaTrader formula.
• Uses high/low information that close-based oscillators like RSI and CMO discard entirely.
• Bounded 0-to-1 scale keeps the reading and its reference bands consistent across instruments and timeframes.
• Ubiquitous availability: shipped by default in MT4/MT5, so values can be cross-checked between platforms when ported correctly.
• The one-sided max/min construction makes inside-bar and outside-bar behavior explicit and easy to reason about.

Pitfalls to watch

• Band touches are not signals: DeM can sit above 0.70 or below 0.30 throughout a strong trend, so treating the bands as automatic reversal zones means standing against the prevailing move.
• SMA drop-off: the line can move because a large range extension from N bars ago left the window, not because of the current bar — not every wiggle is new information.
• Wick sensitivity: because it is built on highs and lows, a single long wick (a stop-run or news spike) feeds directly into the reading in a way close-based oscillators partly filter out.
• Settings and scale inconsistency across platforms: ports vary in period defaults and 0–1 versus 0–100 scaling, so values from different sources are not directly comparable without checking the formula.
• Flat-market edge case: if neither highs nor lows extend over the whole window, the denominator is zero and implementations must guard the division.
• No predictive power: DeM summarizes which direction recent bars extended their range; it forecasts nothing, and no indicator removes the risk of loss.

Pine v6 example

//@version=6
indicator("DeMarker Example", overlay = false)

length = input.int(14, "Length", minval = 1)

// Exact MetaTrader construction
deMax = high > high[1] ? high - high[1] : 0.0
deMin = low < low[1] ? low[1] - low : 0.0

avgMax = ta.sma(deMax, length)
avgMin = ta.sma(deMin, length)

// Guard the flat-window edge case where both averages are zero
dem = (avgMax + avgMin) == 0 ? 0.5 : avgMax / (avgMax + avgMin)

plot(dem, "DeMarker", color = color.blue)
hline(0.70, "Upper",   color = color.gray)
hline(0.50, "Midline", color = color.new(color.gray, 50))
hline(0.30, "Lower",   color = color.gray)

Pro tip: If you port DeMarker between MetaTrader and TradingView, verify the port against the MT built-in on the same symbol and timeframe before trusting it — scale (0–1 vs 0–100), the SMA smoothing, and the strict greater-than/less-than comparisons are all easy to get subtly wrong, and a near-miss implementation produces plausible-looking but different values. Read DeM as one description of recent range extension alongside price structure, not as a standalone trigger. Educational content only — no indicator is predictive, and trading involves risk of loss.

Educational only — not financial advice, not a recommendation to trade. No indicator is predictive; trading involves substantial risk of loss.