What do you think of lagging indicators?

#1
hello guys. I was wondering if using lagging indicators is a correct thing to do, I mean, when the signal is issued, it is lost, yet there should be a usage for these indicators, is there something that I am not able to realize or is it like these things are just to make your FOMO goes up?!
 

godfather

Well-Known Member
#2
Lagging indicators show you what has already happened in the market. You should not rely on lagging indicators alone. You should also use other tools and analyses to support them. You should also know their strengths and weaknesses and use them carefully according to your trading style and objectives. No one indicator helps in making a trading decision right? If you ask me try to incorporate it with other things as well... Try to watch, backtest and experiment as much.

You should also remember that indicators are not infallible. In any ways you need to control FOMO as it is not good for a trader.

The market is something that exploits our weaknesses. It seduces us with promises of riches and success, but it also manipulates us with threats of scarcity and failure. It plays on our emotions, our biases and our heuristics. It makes us overconfident when things are going well, and panicky when things are going bad. It makes us chase bubbles and avoid bargains. It makes us herd like sheep and act like lemmings and this results in FOMO

Instead think like It is a marvelous system that creates value out of nothing, resources, wealth, happiness, and even lives. It is driven by an inexhaustible source of energy, human behaviour. Our creativity, our curiosity, our rationality. The market is a miracle that harnesses our strengths. It enables us to pursue our passions and achieve our goals. It empowers us with choices and opportunities. It rewards us with incentives and feedback. It helps us learn from our mistakes and improve our decisions. It helps us discover new possibilities and solve new problems...

- Have a trading plan.
- Have a trading journal.
- Have a positive mindset.


It is all in our head


Cheers
 
#3
I think lagging indicators can be useful for traders and investors who want to trade with the trend and avoid false signals. Lagging indicators can help them identify the prevailing trend and its momentum, as well as spot oversold and overbought conditions that may indicate a trend reversal. Lagging indicators can also help them set stop-loss and take-profit levels based on the volatility and support and resistance levels of the asset.

However, I also think lagging indicators have some limitations and drawbacks. Lagging indicators can be slow to react to price changes and may generate signals after a significant move has already occurred. Lagging indicators can also be prone to whipsaws and false signals when the market is choppy or sideways. Lagging indicators can also be misleading or contradictory when used in isolation or without proper context.

Therefore, I think lagging indicators should be used with caution and in combination with other types of indicators, such as leading indicators, which can provide early signals of price movements, or coincident indicators, which can provide real-time confirmation of price movements. Lagging indicators should also be used with other tools and methods of analysis, such as fundamental analysis, chart patterns, candlestick patterns, etc. Lagging indicators should also be customized and optimized according to the asset, time frame, and trading style of the user. Lagging indicators are not a magic bullet, but a tool that can help traders and investors make better decisions if used properly.
 

stoch

Active Member
#4
hello guys. I was wondering if using lagging indicators is a correct thing to do, I mean, when the signal is issued, it is lost, yet there should be a usage for these indicators, is there something that I am not able to realize or is it like these things are just to make your FOMO goes up?!
As a forex trader, I acknowledge that lagging indicators have their limitations but can still be valuable tools when used appropriately. While lagging indicators may not provide timely signals for entering or exiting trades, they can offer confirmation of existing market trends or reversals. It's essential to use lagging indicators in conjunction with leading indicators and other analysis techniques to make well-informed trading decisions.
 
#5
Using lagging indicators in trading has its pros and cons. They can help confirm trends and smooth out noise, but they're not great at predicting future movements and can sometimes give late signals. So, they're useful, but you gotta use 'em wisely alongside other tools!
 
#6
According to me lagging indicators provide valuable hindsight but offer limited predictive power for future trends due to their reliance on past data, making them less effective for proactive decision-making.
 
#7
hello guys. I was wondering if using lagging indicators is a correct thing to do, I mean, when the signal is issued, it is lost, yet there should be a usage for these indicators, is there something that I am not able to realize or is it like these things are just to make your FOMO goes up?!
Lagging indicators can be valuable tools in trading, but understanding their role and how to incorporate them into your strategy is crucial. While it's true that they provide signals after the fact, which can seem a bit late, they are excellent for confirming trends and market directions. This confirmation can reduce the risk of jumping into trades based on false signals or premature trend reversals. In essence, they're not about generating FOMO but about adding a layer of verification to your analysis. Integrating them with leading indicators, which predict future price movements, can give you a more comprehensive view of the market. So, while lagging indicators alone might not always offer the timely entry points you're looking for, they play a critical role in confirming your trading decisions and can be an essential part of a balanced trading strategy.
 
#8
Lagging indicators are like a rearview mirror in your car. They show you what's already happened, giving you a historical perspective. Now, you might think, "Well, that's useless, right?" Not exactly.
See, understanding past trends and patterns can help you make smarter decisions for the future. It's like learning from your mistakes or successes. Plus, combining lagging indicators with other tools like leading indicators or good old-fashioned market analysis can give you a more complete picture.
So yeah, while lagging indicators might not be the flashy, instant-gratification kind of tools, they still have their place in the trader's toolkit. It's all about how you use them and not letting FOMO cloud your judgment.
 
#9
A historical perspective is good, but it is better to learn to trade using technical analysis; lagging indicators may show the wrong situation in the market. But these indicators can be used to confirm your opinion
 
#10
Lagging indicators, such as moving averages and MACD, provide valuable insights into past price movements, making them useful for trend confirmation and trade entry/exit signals. However, they inherently lag behind current market conditions, which means they may not always provide timely signals for rapid market changes. While lagging indicators can help confirm trends and filter out noise, it's essential for traders to use them in conjunction with leading indicators or other analysis techniques to make well-informed trading decisions.
 

Similar threads