Lagging indicator - Financial definition
Concise definition of the term lagging indicator
A lagging indicator in finance refers to a metric that provides information on past economic or market trends, typically after those trends have already occurred, making it useful for confirming existing market conditions.
Comprehensive definition of the term lagging indicator
In finance, a lagging indicator is a statistical measure that follows changes in economic or market conditions and provides insights into past trends and performance. These indicators are backward-looking and tend to reflect historical data, making them useful for confirming trends or confirming existing market conditions.
Examples of lagging indicators include unemployment rates, corporate earnings reports, and GDP figures. While lagging indicators may not be as effective for predicting future market movements as leading indicators, they play a crucial role in providing confirmation and validation of ongoing economic trends. Traders and investors often use lagging indicators in conjunction with leading indicators and other market analysis techniques to make informed decisions and assess the overall health of the economy or financial markets.