Using Smoothed Stochastic to Assess DeMarker States

Summary

The document explains the DeMarker oscillator as a way to compare recent price action with the preceding period to gauge demand. It describes the indicator as bounded from 0 to 1 and notes that, unlike many oscillators, it does not use smoothed data. Traders may use it to look for price exhaustion and potential market tops or bottoms, or to assess risk at possible trade levels.

The text associates readings above 0.6 with lower volatility and risk, and readings below 0.4 with increasing risk. It then describes a variant that uses a smoothed Stochastic indicator to make DeMarker states easier to assess and support trend evaluation. No formula, chart, backtest, or evidence is provided for this modification, so the document offers a conceptual description rather than validation that the combined indicator improves decisions.

Key ideas

• DeMarker compares recent price action with the preceding period to estimate underlying demand.
• The oscillator ranges from 0 to 1 and does not use smoothed data in its basic form.
• The document presents extreme readings as clues for exhaustion and possible market turning points.
• Readings above 0.6 are associated with lower risk, while readings below 0.4 suggest rising risk.
• The described variant adds smoothed Stochastic to clarify DeMarker states and trend assessment.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.