Demand index and other leading indicators in futures trading

November 10th, 2023

Today’s futures traders have several indicators at their disposal. When paired with a proven futures trading strategy or plan, indicators can help put any trader—amateur or professional—in the best possible position to succeed. One such indicator is the demand index.

What is the demand index?

The demand index, created by James Sibbet, uses price and volume to identify buying and selling pressure for a given market and is expressed as an oscillating ratio indexed to a range of -100 to 100. This index reflects the idea that a directional move is “valid,” or will have some follow-through, if supported by large volume. Also, comparing close price versus the trading range, coupled with a qualified volume measure, can help traders better understand where the market could trade.

How to use the demand index indicator in your futures trading

Like most oscillators, the demand index (DI) can be interpreted multiple ways:

  • Understanding market bias: When the DI is positive, the market is thought to be bullish; a negative value indicates bearishness; and a cross of the zero line indicates a change in trend is possible.
  • An extreme peak or valley: Due to the leading nature of the indicator, an extreme high of the DI may occur several bars before a peak high in the price of the underlying market. In a similar way, an extreme low on the DI could lead to an upturn in price.
  • Divergence: When price is experiencing higher peak highs, but the DI shows lower peak highs, the market might exhibit signs of weakness, and price may follow the DI in a turn to the downside. Bullish divergence occurs when price makes lower peak lows, but not on the DI.
  • Consolidation: When the DI trades at or around the zero line, as buying and selling pressure offset each other, a directionless market might occur.

Demand index and other leading indicators

Precision Trading Systems is one of many NinjaTrader Ecosystem vendors providing the demand index tool. They’ve also expanded on Sibbet’s six distinct rules with five of their own observations on using the demand index.

In addition, offers a supply/demand discovery indicator that has received rave reviews from NinjaTrader users.

To learn more about the demand index, and for full access to a growing library of other indicators plus market analyzer and SuperDOM add-ons and more, visit the NinjaTrader Ecosystem’s trading apps and services section.

How to Add 3rd Party App to NinjaTrader

To import your 3rd party app or add-on to NinjaTrader, simply follow these 3 steps:

  1. Download the app or add-on file to your desktop
  2. From the NinjaTrader Control Center window, select the menu Tools > Import > NinjaScript Add-On…
  3. Select the downloaded file from your desktop

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