Here’s a quick recap of what we discussed in this lesson:
There are two types of indicators: leading and lagging.
- A leading indicator or an oscillator gives a signal before the new trend or reversal occurs.
- A lagging indicator or a momentum indicator gives a signal after the trend has started.
If you’re able to identify the type of market you are trading in, you can pinpoint which indicators could give accurate signals and which ones are worthless at that time.
So, how do you figure out when to use oscillators or momentum indicators, or both?
That’s another million dollar question! After all, we know they don’t always work in tandem.
We’ll give you a million dollars really soon…
Oh wait! We meant the million dollar answer!
For now, just know that once you’re able to identify the type of market you are trading in, you will then know which indicators will give accurate signals, and which ones are worthless at that time.
This is no piece of cake. But it’s a skill you will slowly improve upon as your experience grows.
You’re not at it alone!
In the future sections, we’re going to teach you how to correctly identify the market environment you are trading in to better use these indicators!