Would you care explaining what does the "lag" consist of?
It is projecting the expected values into the future the way it is written. If they are not correct it is not considered a lag but a simple wrong projection since there is no way how any method can predict the future values accurately all the time
Ochismail Would you care explaining what does the "lag" consist of? It is projecting the expected values into the future the way it is written. If they are not correct it is not considered a lag but a simple wrong projection since there is no way how any method can predict the future values accurately all the time
Welcome to the club. The problem with most TD indicators that he calls "leading" is that they are simply shifted and then named "leading". The leading seems to be such an appealing word when it comes to describing the wonders of some indicators. So, sorry, but that is what you are going to get from those kind of indicators
What are leading, lagging and coincident indicators? What are they for?
An indicator is anything that can be used to predict future financial or economic trends. For example, the social and economic statistics published by accredited sources such as U.S. government departments are indicators. Popular indicators include unemployment rates, housing starts, inflationary indexes and consumer confidence. Official indicators must meet certain set criteria; there are three categories of indicators, classified according to the types of predictions they make.
Leading - These types of indicators signal future events. Think of how the amber traffic light indicates the coming of the red light. In the world of finance, leading indicators work the same way but are less accurate than the street light. Bond yields are thought to be a good leading indicator of the stock market because bond traders anticipate and speculate trends in the economy (even though they aren't always right).
Lagging - A lagging indicator is one that follows an event. Back to our traffic light example: the amber light is a lagging indicator for the green light because amber trails green. The importance of a lagging indicator is its ability to confirm that a pattern is occurring or about to occur. Unemployment is one of the most popular lagging indicators. If the unemployment rate is rising, it indicates that the economy has been doing poorly.
Coincident - These indicators occur at approximately the same time as the conditions they signify. In our traffic light example, the green light would be a coincidental indicator of the associated pedestrian walk signal. Rather than predicting future events, these types of indicators change at the same time as the economy or stock market. Personal income is a coincidental indicator for the economy: high personal income rates will coincide with a strong economy.