Lagging Indicators

Lagging Indicators are stock trading technical indicators, which indicate the change in the trend or momentum after the actual market action.

When you start your stock market journey, you are going to decide whether you are going to become a long term investor or a short to long term stock trader.

If you are choosing to be a trader, technical Analysis. of stocks and commodities is the best way to make trade decision. You will be buying in a bull market and selling in a bear market.

Technical Indicators along with the stock charts, created by plotting price and volume are going to be your life style.

These trading indicators are the mathematical derivatives of price and volume. Some of them are derived from other indicators.

These indicators generate buy and sell signals after the actual change in the trend. So we will be entering the trade after some portion of trend is already over.

This late entry increases the initial stop loss. This will negatively affects our money management and risk to reward ratio.

Since these trading indicators give trade signal after the actual change of trend, they tend to give less number of false signals. The loss due to the stop loss being taken out is reduced.

They compliment other technical indicators and helps in confirmation of the trend.

Some of the common indicators which lag are:

  • ADX Indicator
  • Bollinger Bands
  • MACD
  • Moving Averages
  • Parabolic Sar

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