Length : 1.30 Minutes 

Introduction to Technical Indicators

Forex indicators are effective technical tools that could help traders to improve their trading result.

They can be used to eliminate bad trades and improve the trade entry points. However, since most of the technical indicators are lagging using them alone to generate trade signals is not probably the best idea. Thus, they must be used in conjunction with other indicators or strategies to improve the overall trading result.

A lagging indicator is one that follows price movements and has less predictive qualities, specially when the market is consolidating, moving sideways and is not trending.

The lagging indicators are useful to determine a trend in the market. The most famous lagging indicator is the Moving Average (MA)

 

On the other hand leading indicators are those created to precede and give signals ahead of the price movements. The leading indicators use shorter period in their calculation, thereby leading the price movement. The most famous leading indicator is  Relative Strength Index (RSI)

 

We will cover the famous leading and lagging indicators in the next following topics