Market report   Site map   Open trades  Latest trades   Contact   Bookshop   Downloads

Demand index and its applications  DOWNLOAD Demand index easy language code

Demand Index as a leading indicator

The Demand Index indicator acts as a leading indicator in this example, showing a large drop from +30 to -2 in just a few days, See if you guess what happened the next day?   MARKET UP?    MARKET DOWN?

 

Metastock description of Demand Index

Demand Index for Easy language code

 

The Demand Index, developed by James Sibbet,  combines price and volume in such a way that it is often a leading indicator of price change.

The Demand Index calculations are too complex,

however, for this text. The calculations require 21-column accounting paper to calculate manually.

  • There are six "rules" to the Demand Index:

  • A divergence between the Demand Index and the price trend suggests an approaching weakness in price.

  •  One more rally to new highs usually follows an extreme peak in the Demand Index (the Index is performing as a leading indicator).

  •  Higher prices with a lower Demand Index peak usually coincides with an important top (the Index is performing as a coincidental indicator).

  • The Demand Index penetrates the level of zero indicating a change in trend (the Index is performing as a lagging indicator).

  • When the Demand Index stays near the level of zero for any period of time, a weak price movement that will not last long is indicated.

  • A large long-term divergence between prices and the Demand Index indicates a major top or bottom.

 

 

The Demand Index indicator is not provided by Omega research in the 2000i or Tradestation8 packages, which is a pity as it is probably one of the best and most useful indicators ever made.

 

Many systems and indicators I have produced contain the Demand Index code, as it is such a powerful indicator with a wide variety of applications.

 

Some example of its uses are shown below.