Demand Index Indicator Explained -- with David Moadel
hello everybody welcome to looking at the markets with David Modell I'm gonna
talk about the demand index indicator not one of the best known ones and some
trying to bring you new and exciting indicators to help you with your trading
or investing please be aware that no indicator works all the time
there's no perfect indicator if I found one believe me I would be using it and I
would tell you all about it so and before I get started and I'll tell you
all about the indicator all the basics that you need to know and it's a it's a
pretty simple one actually to use but if you'd like some more help with trading
or investing putting together trading or investing plan because you really need
to have a plan otherwise you don't know what you're doing and you don't know
where you're going you can email me for coaching at David Modell at gmail.com
it's on your screen right now so let's give credit where credit is due
the demand index indicator was developed by James Sibbett and it is available in
very few places unfortunately you have to hunt around for it just to find it
it's on very few platforms if you're using a platform with your broker that
you might have to go to another website just to find it like trading veoh.com
that's what I'm on right now and no they are not paying me to say this although
I've given them a lot of publicity over the years but anyway so and even if you
go to tradingview dot-com even then it's hard to find alright so be aware of that
don't be surprised if you look on your broker's platform and it's not there but
it might be you might have to ask for it or request it alright so I've got the
apple daily candlestick chart up there every candle every candlestick
represents one day of price action but the demand index indicator can be used
on many different timeframes it could be used on one minute charts 3 minute
5-minute hourly daily whatever you like alright because like most indicators it
adjusts and adapts adapts to the timeframe of the
candlesticks and it is pretty much a momentum indicator so you know it's it's
not really overbought oversold you know like RSI or stochastics might be used as
overbought oversold or you know where the line if it gets to a certain number
then it's considered expensive or if it gets down to a certain number it's
considered cheap it's not really used like that as much as just telling you
where the momentum is kind of you can use it as an overbought oversold
oscillator but I found people online mostly using it just as momentum and
typically as a divergence type of indicator and I'll explain that anyway
the midpoint is zero and so if it if it's heading upwards talking about the
demand index indicator here the line the blue line here if it's going upwards
then the trend is up and if it's going downwards then the trend is down that's
kind of an obvious interpretation of it you could also say if it's above zero
that's bullish momentum if it's below zero it's bearish momentum one thing to
keep in mind though is that what's cool about the demand index indicator is that
it takes into account not just the price action but also the volume the price and
the volume are part of the formula and I think that's really good because the
candlesticks by themselves they don't tell you the formula not really I mean
you can oftentimes guess that the formula that the volume is going to be
greater when you get a big candlestick ya oftentimes but not necessarily you
could have a big move on low volume that actually happens so please be aware of
that all right the candlesticks do not tell
you the volume per se whereas the demand index indicator factors the volume into
the equation it's a rather complex complicated equation we're not going to
go over the whole equation you can do that on your own if you want to but I
don't think you necessarily need to know everything about the equation to use
indicator such as the demand index indicator although it certainly couldn't
hurt you if you wanted to look it up all right but it has a lot of moving parts
too and put it that way so let's give you let's go over an example of how a
divergence might come into play for example if I and then I'll show you
where you can find the demand index indicator it's actually hard to find
even on even on trading view and I'll show you how so if you have the you know
lower highs you know lower highs lower lows kind of thing you know in other
words the the demand index line is trending downwards as you can see okay
so let me let me draw that line there meanwhile the price action is trending
upwards at exactly the same time going to hide these ads here and let me see
there you go right and so which one's telling the truth well you could reason
that the remember the candlesticks only take into account the price action
whereas the demand index indicator line takes into account yes the price action
but also the but also the volume and so you might think well perhaps the demand
index indicator is telling the truth here and it turns out that it did look
what happened right after see so there's a divergence here it looks like a
bearish divergence according to the indicator and it turned out that way you
had a pretty steep for candlestick drop there all right so you have something to
think about again this does not work 100% of the time I'm not gonna say that
the demand index indicator it tells the truth all the time all right but it does
take into account more than just the price action whereas the candlesticks
really is just about the price action so that was just one example but always I
recommend trying something out with virtual trading or paper trading like a
demo account you know just to make sure it works for you before you commit any
real capital to it and if you do commit real capital to it respect your stop
losses use very small position sizing stay safe safety is paramount all right
so you want to know how to get this thing no problem we're gonna we're going
to look at okay we're on trading view go to indicators and strategies and it's
funny you look for demand index on here it's not on there right
yep not even on there so what do you have to do well fortunately there are
nice people on tradingview who actually make scripts they're coders I guess they
know coding and so you go to the search box here after you click on indicators
of stress and strategies go to that search box with the magnifying glass
type in demand and comes right up at least it does for me and yeah dough boy
that's by far the most popular one that I found that that just says demand index
and I read some reviews and you know it seems pretty reliable I think I hope
again I cannot guarantee all right this was written by a user so I don't know if
it's accurate or not all right but anyway that's the one that I showed you
today and I'm sticking to it all right but there are others you can
check out but you know looks like this one at the top here by Doughboy is
pretty popular compared to the other ones so you might want to just use that
one if you want to or if you could find it elsewhere I mean I google searched it
pretty hard and I really couldn't find it in many other places this was the
easiest way to find it but you have to search for it through the search box
there all right so I hope this was helpful to you with the demand index
indicator anyway if you like this video please give me a thumbs up on YouTube
that'll occur encouraged me to make vort more videos about technical indicators
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whenever I put out a new video like this one and if you're interested in the
coaching I do offer it for the coaching you can email me at David Modell at
gmail.com it's on your screen right now hey thanks for watching and for
listening I'll talk to you again soon