Lagging Indicator (Stock market)

what is a lagging indicator

1. A measurable economic factor that changes after the economy has already begun to follow a particular pattern or trend.

The indicators that can do so have already been identified as MACD and moving average s.

A "Lagging Indicator " Can Benefit Your Trading

By Richard Krivo, Trading Instructor




Lagging indicator

Lagging Indicators

A lagging indicator is an economic indicator that reacts slowly to economic changes, and therefore has little predictive value.

. An economic indicator or signal that reacts slowly to economy changes. Unemployment figures are a

s. on the other hand, tend not to give as many erroneous signal s. Because they only give signal s after a trend has commenced, the chances of error are significantly reduced. The only problem is that they could come too late for you to enter a profit able position on the trade.

A measure of economic activity which tends to change after change has occurred in the overall economy eg. CPI .

s on the other hand are created to give a picture of where the market has been, and therefore where it is likely to

continue to go. As this is the case these indicators are normally used by trader s looking to trade with the trend. and offer little value in ranging market s.

s as their name implies, follow the price action and are commonly referred to as trend-following indicators. It has less predictive qualities. The usefulness of

s tends to be lower during non-trend ing period s but highly useful during trend ing period s.

s Economic data that trail the economy, rising or falling after the economy has shifted. Examples of

s include expenditures for new plants and equipment, commercial and industrial loans outstanding, and unemployment rates for medium and long-term unemployed.

doesn't change until after the economy has changed. So an economic change would predict changes in

s include business spending, the unemployment rate. the prime rate. labor costs, outstanding bank loans, and inventory book value.


s. all moving-average -based strategies are not intended to get you in at the exact bottom nor out at the exact top. Rather, they keep you in line with the security ’s price trend by being on the right side of the bulk of the move.


Category: Forex

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