Lagging Technical and Economic Indicators

What are Lagging Indicators?

Lagging Indicators provide buy and sell signals that are triggered once a strong move primary is in place. These indicators are often the tools of choice for traders that have longer investment horizons and are looking to capture profits from larger moves. The challenge with using these indicators is that you will have to make sure you are trading in markets that either have a strong bullish or bearish primary trend. Since the signals do not lead the price action, if you are trading choppy markets, you will find yourself caught in a number of false signals. However, the benefit of utilizing these indicators is that you can greatly reduce your risk by allowing the trend to develop, to ensure you are on the right side of the market. There are two types of lagging indicators: (1) economic and (2) technical.

Economic Lagging Indicators

Economic lagging indicators measure the health of the economy and are often reported in the weekly economic reports. Examples of economic lagging indicators are the unemployment rate, corporate profits, and labor costs.

Technical Lagging Indicators

Technical lagging indicators measure the price movement over a longer number of sessions. Day traders and scalp traders will want to avoid using lagging indicators as their primary source for trade triggers. Examples of technical lagging indicators are moving average crossovers and macd.