Leading vs Lagging Indicators; What's the Difference?
Leading vs Lagging Indicators; What's the Difference? When it comes to predicting the future performance of stocks and investments, there are two primary types of indicators: leading and lagging. While they’re both important tools in an investor’s arsenal, there are some distinct differences between the two. Let’s take a closer look. Lagging indicators look to the past to provide information about current conditions. This type of indicator relies on historical data to explain what is happening in the present. Lagging indicators are the most widely used as they are considered to be more reliable than leading indicators. However, this type of indicator won’t help you decide what to do in the future, since it only looks backward. Examples of lagging indicators are: 1. Moving Average 2. Moving Average Convergence Divergence 3. Bollinger Bands How to use Lagging indicators in the most effective way: To effectively use lagging indicators, start by finding a reliable source ...