# Demand Index Demand Index is an indicator on [Vela](https://vela.luxalgo.com/chart), our next-generation charting platform, written in Pine Script®. Demand Index computes James Sibbet's volume-and-price-change composite: normalized volume is split into buying and selling pressure by the size of each volatility-scaled move, and their signed ratio plots around zero with 3-bar EMA smoothing. Dashed levels at +3 and -3 mark extreme spikes, with optional divergence drawing and six alerts covering crosses, extremes, and divergences. - Indicator in the LuxAlgo Library, by LuxAlgo, published Jul 1, 2026. - Access: free. - Concepts: [Demand Index](https://www.luxalgo.com/library/concept/demand-index/) (primary) - Open on Vela: https://vela.luxalgo.com/chart?pineScriptCodeId=rmipxesh92sobnk5kk9uso59 - Page: https://www.luxalgo.com/library/indicator/demand-index/ **Demand Index** is the first faithful Library build of Sibbet's [Demand Index](https://www.luxalgo.com/library/concept/demand-index/), keeping both sides of the market alive on every bar. Volume, normalized by its recent average, is split into buying and selling pressure according to the size of the volatility-scaled move in the weighted price; the components are averaged over the pressure window and their signed ratio plots as a zero-centered oscillator with a gradient fill. ## How to Trade the Demand Index? - **Cross above zero**: buying pressure has overtaken selling pressure; the mirrored cross marks dominant supply. - **Spike beyond +3**: an extreme buying-pressure reading. Under Sibbet's rules such peaks tend to precede a later retest or new price high rather than the final top; the -3 mirror covers lows. - **Divergences**: price at a lower low as the index bottoms higher hints at fading supply, the reverse at fading demand; both alert even when drawing is disabled. The index belongs to the Library's [volume and order-flow family](https://www.luxalgo.com/library/family/volume-orderflow/), and its premise is that participation shifts before price fully resolves, which is why divergence behavior, more than mechanical crosses, carries its reputation. ## Demand Index Settings - **Pressure Window** (default 10): bars the two pressure components are averaged over. - **Volume Normalization Length** (default 10): average that scales each bar's volume. - **Volatility Length** (default 10): average of the two-bar range that scales the price-change term. - **Smoothing Method** (default EMA) and **Smoothing Length** (default 3): final smoothing of the raw ratio; 1 disables it. - **Upper Extreme Level** (default 3) and **Lower Extreme Level** (default -3): the dashed extreme lines and their alerts. - **Show Divergences** (default off) with **Pivot Lookback Left** (default 5) and **Pivot Lookback Right** (default 5): pivot rules for divergences. - Bullish, bearish, and level colors. ## Frequently Asked Questions ### Demand Index or Money Flow Index? The [Money Flow Index](https://www.luxalgo.com/library/indicator/money-flow-index/) is bounded 0–100 and assigns each bar's entire money flow to one side by typical-price direction. The Demand Index is unbounded around zero and always carries both pressures, letting the size of the move decide how volume is shared between them. ### Why do the extremes sit at +3 and -3? They are conventional spike markers rather than mathematical bounds; the ratio can run past them in strong episodes. Tighten or widen them to your instrument. The alerts follow the inputs. ### Does it work on symbols without volume? No. Volume is the raw material of both pressure components, so instruments lacking volume data cannot produce readings; lean on a pure price-momentum oscillator there. ## Related indicators - [Oscillator Matrix](https://www.luxalgo.com/library/indicator/luxalgo-oscillator-matrix/) (Money Flow Index): markdown at https://www.luxalgo.com/library/indicator/luxalgo-oscillator-matrix.md - [LuxAlgo - Screener (OSC)](https://www.luxalgo.com/library/indicator/luxalgo-screener-osc/) (Money Flow Index): markdown at https://www.luxalgo.com/library/indicator/luxalgo-screener-osc.md - [Delta ZigZag](https://www.luxalgo.com/library/indicator/delta-zigzag/) (Weis Wave Volume): markdown at https://www.luxalgo.com/library/indicator/delta-zigzag.md - [Price Zone Oscillator](https://www.luxalgo.com/library/indicator/price-zone-oscillator/) (Volume & Order Flow): markdown at https://www.luxalgo.com/library/indicator/price-zone-oscillator.md - [OBV Divergence](https://www.luxalgo.com/library/indicator/obv-divergence/) (Volume & Order Flow): markdown at https://www.luxalgo.com/library/indicator/obv-divergence.md - [Smart Money Index](https://www.luxalgo.com/library/indicator/smart-money-index/) (Volume & Order Flow): markdown at https://www.luxalgo.com/library/indicator/smart-money-index.md - [Trade Volume Index](https://www.luxalgo.com/library/indicator/trade-volume-index/) (Volume & Order Flow): markdown at https://www.luxalgo.com/library/indicator/trade-volume-index.md - [Volume Flow Indicator](https://www.luxalgo.com/library/indicator/volume-flow-indicator/) (Volume & Order Flow): markdown at https://www.luxalgo.com/library/indicator/volume-flow-indicator.md --- Source: https://www.luxalgo.com/library/indicator/demand-index/ (LuxAlgo Library). Free to use with attribution: https://www.luxalgo.com/library/license/