What are Leading and Lagging Trading Indicators?

Leading and lagging indicators are tools that evaluate the strength or weakness of economies or financial markets. Simply put, leading indicators change in advance of an economic cycle or market trend. In contrast, lagging indicators are based on previous events and provide insights into the historical data of a particular market or economy.

In other words, leading indicators provide predictive signals (before the occurrence of events or trends), and lagging indicators generate signals based on a trend that is already underway. These two classes of indicators are used extensively by investors and traders who employ technical analysis (TA), making them quite useful in stock, Forex, and cryptocurrency trading.

We will go in-depth about trading indicators in the coming days. Pin our channel to enjoy free educational posts.

See also  Moving Averages