Thursday, August 27, 2009

Oscillators & Momentum Inidcators

There are two types of indicators:
  1. Leading indicator
  2. Lagging indicator
Leading indicator
It gives a buy signal before the new trend or reversal occurs.

Lagging indicator
It gives a signal after the trend has started.

What are the difference between both of them?
Leading indicators give a lot of fake-out signals while lagging indicators give signals after the price change is clearly forming a trend.

Oscillators/leading indicators
It is any object or data that moves back and forth between two points.

Oscillators indicators
Momentum/lagging indicators
Spot trends once they have been established.

Momentum/lagging indicators
MACD & Moving Averages

So which one is better to use?
Both leading & lagging indicators are important because they need each other in order to help traders to know the market condition.


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