Technical Indicators – The 3 Different Types

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http://www.stock-market-strategy.com/technical-indicators-the-3-different-types/ We have previously written about the different types of technical indicators, Lagging, Leading and Confirming but we are still running into traders who have not quite got the hang of it. So we decided to create this video to help those traders understanding the difference indicators and as a result put together the right indicators instead of for example 2 of the same kind.

Lagging indicators are best used as filters and trend determination. Moving Average is the most popular one and is only the one we use the most. The whole point of adding filters is to prevent you from trading noise and what better tool to use than a lagging indicator. Something that smooth price action out.

Leading indicators is used for entries. Examples of these are Stochastic and MACD. Many traders still make the mistake of adding several leading indicators thinking it will give them some sort of edge but we believe that all it does is confusing the trader.

Confirming indicators are used to increase the odds of success by for example using volume to confirm entry signals.

For more stock market education please feel free to visit our website http://www.stock-market-strategy.com

11 Comments

  1. Angello Hector

    April 4, 2016 at 12:10 am

    very informative!

  2. Jessica Frater

    April 4, 2016 at 12:42 am

    I am new to trading and I find your videos the most user friendly and easy to understand . I do however have a question can you further tell me which indicators are the lagging indicator and etc. I watched the video on the three types of indicators my set is 20 moving average RSI at 7 and MACD at 7,14 and 9. Is this a proper set up for day trade/scalper.

  3. Rationalific

    April 4, 2016 at 1:24 am

    Very useful info! Thanks!

  4. Frederick Ramos

    April 4, 2016 at 2:18 am

    Thanks! Loved the video

  5. Stock Market Strategy

    April 4, 2016 at 2:21 am

    Yes we are. Candlestick patterns are also a great non lagging tool. But yes. Support – Resistance is a must use tool in trading.

  6. Stock Market Strategy

    April 4, 2016 at 3:10 am

    All indicators are lagging indicators as they are all derived from price but Stochastic and RSI are trying to be what technical traders class as leading/predictive.

  7. ralphroc

    April 4, 2016 at 3:31 am

    Your work is great, it's so hard to find good, balanced, and quality TA advice, but you sure have it. Thanks for all you do.

  8. Stock Market Strategy

    April 4, 2016 at 3:54 am

    Appreciate it. Let me know if you want me to do a video on a specific subject.

  9. Stock Market Strategy

    April 4, 2016 at 4:02 am

    If you use a very long term MA in your BB then I would say it is both Lagging (using MA for trend) and Leading (using Bands for entry) but if you use the standard 20 Period BB then I would say it is a leading indicator. It will give you both long and short signals but you will be needing a Lagging indicator for determining when you take the long signals and when to take the short signals. A BB can give many "wrong" sell signals in an uptrend and vice versa.

  10. markw999

    April 4, 2016 at 4:59 am

    How do you classify Bollinger Bands??

  11. Squid

    April 4, 2016 at 5:24 am

    Thanks for the great video, Phillip.
    Happy trading.

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