DeMarker Indicator Tested: It Said Overbought or Oversold on a Third of All Bars, and 0 of 16 Runs Passed After the Spread

DeMarker was designed by Tom DeMark to spot exhaustion: the moment buyers stop pushing the highs higher, or sellers stop pushing the lows lower. It ships with MetaTrader 4 and 5 under Indicators, Oscillators, and it draws one line between 0 and 1 with levels at 0.3 and 0.7.

Guides teach it as an overbought and oversold tool: sell when the line falls back below 0.7, buy when it climbs back above 0.3, sometimes only in the direction of the trend, sometimes on a cross of the middle 0.5. Each of those is a rule, so each can be counted on real bars with a fixed exit.

What does the DeMarker indicator measure?

So DeMarker near 1 means that in the last 14 bars the highs kept stepping up and the lows almost never stepped down. It looks a lot like RSI, which does the same with closes, and on our charts the two lines correlated at 0.77 to 0.80.

How was it tested?

• Data: EURUSD M5 from June 3 to August 26, 2026, 16,926 bars; gold M5 from June 16 to August 26, 13,736 bars. M15 built from the same bars.
• Four rules: DeMarker 14 falls back below 0.7 (sell) or climbs back above 0.3 (buy); the same only on the EMA 200 side; DeMarker crosses 0.5; and the return from the stricter 0.8 and 0.2. For scale, Stochastic 14,3,3 returning from 80 or 20 and its K/D cross inside the zone, on the same exit.
• Exit and pass: stop 1.5 ATR, target 3 ATR, 48 bars at most, one trade at a time, the same exit as in the forex indicators list, ranked. Cost 1 pip on EURUSD and $0.30 an ounce on gold, from spread and swap costs in MT4. A run passes if it makes money after cost, in both halves (split July 15), and beats the 95th percentile of 200 random-entry runs with the same exit, as in algorithmic rule vs random entry.

How often is DeMarker overbought or oversold?

A third of all bars in a zone is a lot for a signal that is meant to be rare. It comes from the short 14-bar average of small steps: three or four bars in a row with higher highs are enough to push DeMarker above 0.7 on a 5-minute chart, and a typical visit is over in 15 minutes. Gold spent more time in the zones than EURUSD on both timeframes, because its runs of one-sided bars were longer.

Does price turn when DeMarker says overbought?

This is the main finding. On EURUSD, an entry into the overbought zone was followed by a small pullback a little more often than not, but the median move 12 bars later was zero. On gold it was the other way round: more than half the time an “overbought” reading was followed by more rise, and the median move went with the zone, not against it. Selling gold because DeMarker crossed 0.7 meant selling into strength. The same overbought and oversold question for two other oscillators is in Williams %R on forex and RSI trend vs overbought and oversold.

Did any DeMarker rule make money?

Trades in brackets. 14 of 16 DeMarker runs lost after cost, and most of them lost more than random entries with the same exit. The two above zero did not hold up. The 0.5 cross on gold M5 lost $0.40 an ounce a trade in the first half and made $0.34 in the second. The filtered fade on gold M15 made $0.93 in the first half and lost $0.39 in the second, on only 82 trades. Neither came near the 95th percentile of the random runs, so 0 of 16 passed.

Why did the classic DeMarker fade lose?

Before cost it was close to flat: -0.24 pips a trade on EURUSD M5 and +$0.06 an ounce on gold M5. The win rate after cost was 31% to 35% on all four charts, with a target twice as far as the stop, which is break-even territory at best. Then the spread takes 1 pip a trade on EURUSD, and on a 5-minute chart that is a big slice of a 1.5 ATR stop. A signal that fires 18 times a day and has no edge before cost can only lose after it, the same problem we saw in CCI indicator tested. The stricter 0.8 and 0.2 levels cut the trades by 28% to 41% but lost more on both gold charts.

What would I do with DeMarker?

• Do not sell gold just because DeMarker is above 0.7. On both gold charts price kept rising more often than it fell after the line entered the zone.
• Do not expect the 0.7 and 0.3 levels to be rare. A third or more of all bars sat beyond them, so a zone reading on its own carries little news.
• If you already use RSI or Stochastic, DeMarker adds little. It moved with RSI at 0.77 to 0.80 and lost alongside Stochastic; the head-to-head is in DeMarker vs Stochastic.
• Changing the period is not a rescue. 20 settings per chart are in DeMarker indicator settings for MT4, and on EURUSD M5 only 1 of 19 made money.

Frequently asked questions

What is the DeMarker indicator in forex?

An oscillator from 0 to 1 that compares each bar’s high and low with the bar before. It averages the upward steps of the highs and the downward steps of the lows over 14 bars; near 1 the highs kept rising, near 0 the lows kept falling.

Is the DeMarker indicator good for forex?

Not as a signal on its own in this test. 0 of 16 runs of four DeMarker rules made money after cost, in both halves and better than random entries, on EURUSD and gold, M5 and M15.

What are the best DeMarker levels?

MetaTrader uses 0.7 and 0.3. On our charts DeMarker 14 was beyond them on 33% to 43% of bars. The stricter 0.8 and 0.2 halved that, but the return from those levels still lost on all 4 charts.

Does a DeMarker reading above 0.7 mean price will fall?

Not reliably. On gold M5 and M15 price moved further up within 12 bars 52% to 54% of the time after DeMarker entered the 0.7 zone. On EURUSD it pulled back slightly more often, but the median move was zero.

Does DeMarker repaint?

No. It is built from closed highs and lows. The value on the current bar changes until the bar closes, so all signals here were taken on the closed bar.