Demand Index Node
Buying vs Selling Pressure Ratio
Overview
The Demand Index Node measures the ratio of buying pressure to selling pressure on each bar. By dividing the volume-weighted distance from low to close (buy volume proxy) by the volume-weighted distance from close to high (sell volume proxy), it produces a dimensionless ratio centered around 1.
Values above 1 indicate buying pressure dominance (demand exceeds supply); values below 1 indicate selling pressure dominance. The indicator requires no period parameter — each bar is computed independently from its own OHLCV data, making it immediately responsive to price and volume changes.
Algorithm
Parameters
No configurable parameters. The Demand Index is fully determined by each bar's OHLCV data.
Inputs & Outputs
| Slot | Direction | Type | Description |
|---|---|---|---|
| input | Input | OHLCV | Standard OHLCV price and volume data |
| values | Output | (number | null)[] | Demand Index ratio (DI > 1 = buying, DI < 1 = selling) |
| timestamps | Output | number[] | Unix timestamps aligned to input |
Use Cases
Intraday Buying/Selling Pressure
Use DI on each bar to measure the instantaneous balance of buying vs selling pressure. A sustained sequence of DI > 1 bars indicates accumulation; DI < 1 bars indicate distribution — without the lag of cumulative volume indicators.
Volume Divergence Confirmation
Compare Demand Index against price trend: price making higher highs while DI is declining indicates weakening buying pressure even as price rises — a bearish divergence suggesting the uptrend may be running out of volume support.
Breakout Quality Assessment
At a breakout bar, a DI > 2 (strong buying dominance) confirms that the breakout is driven by genuine demand rather than a thin-volume false breakout. Low DI on a breakout bar (near 1.0) signals low conviction and higher reversal risk.
Tips & Best Practices
Doji Bars Produce DI = 1
When close ≈ open and high − low is small (doji candles), BP ≈ SP so DI ≈ 1. These neutral bars indicate indecision. Filter them out by requiring minimum range before acting on a DI signal.
Smooth Before Thresholding
DI is noisy on a bar-by-bar basis. Apply a 3–5 period SMA to the output before using threshold crossings (e.g., DI crossing above 1.5) as signals. This removes single-bar spikes without significantly increasing lag.
Complement with OBV or CMF
Demand Index measures per-bar pressure; OBV and CMF measure cumulative flow. Combine: use DI for real-time pressure confirmation and OBV/CMF for trend-level accumulation/distribution assessment.