Do you know why Indicators and Oscillators are lags as compared to price?
I tried to figure out how Indicators and Oscillators lag in real-time. Both indicators and Oscillators are awesome tools but they lag.
So, it is my personal view that it will not so much effective in day trading or scalping.
However, you can use them for short-term to long-term investment purposes.
So, it is better to switch from Indicators based trading to price-action trading.
Lagging Indicators in Stock Market
If you’re a day trader, then we all know how important is real-time data. Any kind of delay will take your account from a profitable to a losing one.
So, you cannot ignore the hard facts that are so much crucial in intraday trading.
I tried almost all the technical analysis tools, whether it is indicators or oscillators.
Moving Averages, Relative Strength Index, Bollinger Bands, Supertrend, MACD, and the list goes on. All seems to be lagging.
Suppose you’re a day trader and you’re using the above indicators and oscillators in 15 Minute time frame.
That means you need to wait for 15 minutes to see any changes in these indicator’s values.
So, can you imagine what can happen in 15 minutes if you’re a day trader?
It might happen that the momentum may start and finish off in this time period. However, your favorite indicators and oscillators remain in their place.
The only indicator that leads you ahead in trading is leading indicators. Unfortunately, you’ll not find many of them.
However, at least they tell you where the stock price may go.
One such leading indicator is Fibonacci Retracements levels. Another leading indicator is Dochian Channels.
Nevertheless, price action is the ultimate way to identify the probable price movement. In fact, I trust the pure price that acts as one of the best leading indicators.
So, I hope you know now what is lagging indicators and leading indicators in the stock market.