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Lagging Indicator

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Lagging Indicator
An economic data series that consistently moves with overall activity but turns up or down later that general economy.
    
It can be a  measurable economic factor that changes after the economy has already begun to follow a particular pattern or trend or  a technical indicator that trails the price action of an Underlying asset and is used by traders to generate transaction signals or to confirm the strength of a given trend. Since these indicators lag the price of the asset, a significant move Will generally occur before the indicator is able to provide a signal.
    
Lagging indicators confirm Long-term trends, but they do not predict them. Some examples are unemployment, corporate profits and labor cost per unit of output. Interest rates are another good lagging indicator; rates change after severe market changes.
    
An example of a lagging indicator is a moving average crossover, because it occurs after a certain price move has already happened. Technical traders use a Short-term average crossing above a Long-term average as confirmation when placing buy orders since it suggests an increase in momentum. The drawback of using this method is that a significant move may have already occurred, resulting in the trader entering a Position too late.
Posted by  Privatebanking.com
 
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