Leading technical indicators

What are leading indicators?

Leading indicators - type of technical analysis indicators for stock markets, including The indicators are used for predicting prices in the short term. As the name of these indicators speaks for itself, leading indicators should warn the trader in advance about possible price reversals.

What are leading indicators

Why do we need leading indicators?

Leading indicators are usually used to determine when an asset will be oversold or overbought. The basic premise associated with leading indicators is that when an asset is considered oversold, its price will soon begin to rise, and when an asset is overbought, its price will soon begin to decline.

What indicators and binary options are leading?

Most often, in search of such indicators traders choose CCI, RSI, Momentum, Stochastic Oscillator, which can be attributed rather to the oscillator type indicators, ie, showing the state of overbought and oversold market.

However, a number of traders do not consider oscillator indicators to be leading. In their opinion, the readings of this type of indicators actually become lagging and, moreover, are often contradictory and false. Some traders propose to use the dynamics of interest rates and spread as a leading indicator, but this option is not without limitations.

Another type of leading-type indicators are indicators that use the concepts divergence and convergence. Due to the application of complex mathematical calculations such indicators allow to determine the moment of "fading" of the existing trend or, on the contrary, its gaining strength in the future.

A number of experts believe that in addition to technical analysis indicators, fundamental data can also serve as leading indicators. For example, the CCI or the Consumer Confidence Index, or the Beige Book, the U.S. Current Situation Survey and other general economic data.

How to use leading indicators?

Leading indicators can be used in trading on any asset: currency pairs, binary optionsThe following are some of the most important things you can do.

The most ideal use of leading indicators is to simultaneously analyze at least 3 indicators on different timeframes. If all indicators show the same signal (buy or sell), then the probability of profitability of such a position increases significantly.

You can download leading indicators on specialized sites and forums.

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