Power Hour with Marcello Ducille

1. Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN > EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED WITHIN THIS SITE, SUPPORT AND TEXTS. OUR COURSE(S), PRODUCTS AND SERVICES SHOULD BE USED AS LEARNING AIDS ONLY AND SHOULD NOT BE USED TO INVEST REAL MONEY. IF YOU DECIDE TO INVEST REAL MONEY, ALL TRADING DECISIONS SHOULD BE YOUR OWN. CFTC/NFA Disclaimer

4. What is the Demarker Indicator? The DeMarker indicator is named after Tom DeMark who claims to have developed this indicator to overcome the shortcomings of other overbought/oversold oscillators. There are different versions of it in the market; in some cases the indicator uses 0 and 1 as the maximum and minimum of oscillation, while in others, the typical 0-100 range is preferred. Courtesy of google images and Investopedia Introduction

5. Any level between 3 and 7 (or 30 and 70 if larger scale is preferred) is regarded as a neutral level characterizing a continuation phase. If the price is in an uptrend, and the indicator value is also rising, the trend is expected to go on. If we observe an uptrend, while the indicator value is falling, we're faced with a divergence, implying that the uptrend is slowly losing momentum and may suffer an abrupt reversal. Similarly, when the price is in a downtrend, but the indicator's value is rising, we suspect that the downtrends is weak. The oscillator and price action are converging, implying an ultimate reversal. If both the indicator and the price are in an uptrend, the interpretation is that the existing price pattern will continue to develop. Courtesy of google images The DeMarker As Indicator

6. Courtesy of Google images The DeMarker indicator is calculated by first determining a DeMin, and DeMax value, which roughly correspond to the high or low of a particular time period. The obtained values are then plugged into a formula which generates the value of the indicator itself. The Bollinger Bounce If the high of today is greater than the high of yesterday, we set the DeMin value at the difference of highs of the two time periods (High of today - high of yesterday). Otherwise, DeMax is set to zero. Similarly, if the low of today is lower than the low of yesterday, the difference between the lows of the two periods becomes the value of DeMin (low of today- low of yesterday). If the low of yesterday is equal or lower than today's low, DeMin is set to zero. Now we plug these two values into the formula below: DeMark = N-period Moving Average of DeMax / (N-period Moving Average of DeMax + N-period Moving Average of DeMin) Calculate your DeMarker

7. Courtesy of Google images DeMarker Indicator is an oscillator, and it is possible to use with it all the common techniques that are applied to oscillators. The overbought and oversold levels of the indicator are at 0.3, and 0.7, respectively. When the oversold value is exceeded, the expectation is that the prices may soon stop falling. In the opposite case, we anticipate that the uptrend will run out of steam in a short time. If you remember how the RSI is constructed, you will note that the formulation of the DeMarker indicator is almost the same as that of the RSI with the difference being that the RSI most often uses an exponential moving average, while the DeMarker indicator uses the simple moving average of the prices. But on the whole, both indicators compute the same formula for the min-max values, and interpret them in very similar ways. In short, it is fair to say that one will never need to create a technical strategy where both the DeMarker and RSI indicators are necessary. They are both oscillators, but beyond that, the great similarity between the two indicators means that using one will generally grant us the information that can be derived from the other. The indicator is most suitable to a ranging market. If it is used in trending markets, it must be used as an auxiliary to a trend indicator, and divergence/convergence configurations must be sought out for its interpretation. The Bollinger Bounce Trade the DeMarker Way

8. The DeMarker indicator is a solid, simple and reliable oscillator in general, and can be used as a substitute for the RSI when the trader chooses to do so. Arguably, the decision to use any of these two indicators could simply depend on availability. For either, it is always important to remember the strengths and limitations as with any indicator and utilize your indicator in a consistent well-tested approach. Closing Notes

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