Leading and lagging indicators

What are Leading and Lagging Indicators?

Online gold trading charts tell you with absolutely precision where a gold-currency pairing has been, and tells you everything you need to know about where the trend is headed – if you know how to read it right. That’s where indicators come in. Indicators give you signals that can be used to make smart decisions on the market and reap profit. Leading and lagging indicators are two classifications which can help you read the market. Let’s explore the meaning of these two indicators and the difference between them:

Leading Indicator

A leading indicator signals that a trend or reversal is upcoming. A leading indicator is also known as an oscillator. If the leading indicator is accurate, you’ll be able to get in on every trend right at the beginning and ride the wave to huge online gold trading success. The trouble is, not every leading indicator is accurate, and you may fall victim to many false signals before an accurate one hits.

You can’t avoid leading indicators, so your best bet is to use them for your benefit. Even if they may not be the most accurate predictors of an upcoming trend, they can be used to warn you that a trend is ending. However, if you aren’t sure how to read a particular price movement, your best bet is to do nothing. Don’t force a trade if you don’t have to.

Lagging Indicator

A lagging indicator, also known as a momentum indicator, signals that a trend is underway. Think of it as a nudge to pay attention to something happening right under your nose before it’s gone. So maybe you’ll be a little late to the party, but you can still reap some profit before the trend fizzles out.

Lagging indicators are best used to confirm a trend. Sure, you may not be able to capitalize on the trend right from the beginning, but you also don’t have to take the risks associated with being a trailblazer. Use lagging indicators to stack up small profits that add up to big profits instead of the long run. You don’t need to hit a grand slam every at-bat to come out a winner.

You can use leading and lagging indicators to known when to jump in the market and when to jump out. If your instincts are right, you can make a tidy profit with online gold trading.

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