March 24, 2011
Leading and Lagging Technical Indicators for day trading futures
– Leading vs. Lagging Indicators
o Leading = heads up
o Lagging = gives you confirmation (what happened)
o Leading does NOT exists, they are all lagging indicators
o We must see price come in first, then the indicator can perform the calculation for us to use, this is why they are ALWAYS lagging.
o Leading Indicator = Price
o Whatever that ‘price’ is will tell me immediately what to do next….as long as I know how to read the tape, how to read the price.
o Now you know why I don’t trust calculations like moving avgs or fib retracements until the PRICE proves they are real.
o Lagging Indicators = we want to work with the best indicators we can to avoid that lag
o Price does not lag as much as Momentum
o Momentum does not lag as much as MACD.
o I will use my leading indicator (price) to get me into a trade.
o I will use momentum to qualify the entry (less lagging)
o And I use a MACD to tell me when to EXIT (most lagging)
Swing Trades: cover this in training
– Setting up charts and indicators: cover this in training
– Gray Blocks: sellers @ LOD or buyers @ HOD
– Best times to trade: beginning and end of the year
– Worst times: end Q1, End of Summer, Last week of December, 1st week of January
