Lagging Indicator

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Definition – What does Lagging Indicator mean?

A lagging indicator is a data point, formation or piece of information that follows after an event has occurred. Lagging indicators are of little use in predicting future price action in a currency pair, but they can confirm a trend or a trading thesis. Many fundamental economic indicators are lagging indicators in that they are summaries of historical data.

ForexTerms explains Lagging Indicator

Labelling an indicator as leading or lagging can be a frustrating exercise because it depends on what you are looking to predict. In technical analysis, everything is a lagging indicator. In fundamental trading, however, some indicators may simply be reporting historical data, but that data will provide insight or have an impact on another indicator that has yet to be released – thus becoming a leading indicator. True lagging indicators can tell a trader whether his or her thesis was correct over the period covered in the release, but not much else. Of course, using the past to make educated guesses about the future is the base of all investing, not just forex trading.