What do you think of lagging indicators?

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?!


Well-Known Member
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

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.

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