Lagging indicators are also known as trend-following or trend-confirming indicators.
Trading signals of the lagging indicators come after the event has occurred on the chart.
A disadvantage of lagging indicators is that they put you in the trade fairly late. This means that you will typically miss a relatively big part of the price move.
Popular Lagging Indicators
Popular lagging indicators are Moving Averages (Simple, Exponential, Weighted), Parabolic SAR, and the Moving Average Convergence Divergence (MACD).
So, how do you figure out when to use oscillators or trend-following indicators, or both?
That’s another million-dollar question! After all, we know they don’t always work in tandem.
We’ll give you a million dollars really soon…
Oh wait! We meant the million-dollar answer!
For now, just know that once you’re able to identify the type of market you are trading in, you will then know which indicators will give accurate signals, and which ones are worthless at that time.
This is no piece of cake.
But it’s a skill you will slowly improve upon as your experience grows.
You’re not at it alone!
In the future sections, we’re going to teach you how to correctly identify the forex market environment you are trading into and better use these indicators!