Wednesday, July 21, 2010

The Start of Something Good: Using the DeMark System

Alex Roslin

November 2009

SFO Magazine

Investors have become seriously gun-shy. Even top traders such as Warren Buffet have found themselves in money-losing trades. For some, it may feel as if their edge has evaporated.

However, the approach developed by Tom DeMark, an analyst who has worked with such luminaries as George Soros, Paul Tudor Jones and Steve Cohen, may be of help in today’s markets.

In the 1970s, before the days of personal computers, DeMark spent his waking hours working out by hand a maze of market indicators that he laboriously tested through trial and error. (He was so obsessive that in his spare time, he charted his infant daughter’s heart rate.) DeMark’s resulting discoveries became widely known to and adopted by market pros. The method combines elements of both trend following and countertrend trading.

Two of the great aspects of the DeMark system are that the main rules are public and they are simple to apply.


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