There are two main types of indicators: leading indicators (also known as oscillating indicators or simply oscillators) and trailing indicators (also known as trending or momentum indicators). Leading indicators utilize price data to predict price changes before they occur, while lagging indicators use the same data to predict price movements before they occur. Between the two types of indicators, the primary difference is the consistency with which they provide findings. Leading indicators would be the 'holy grail' of Forex trading if they could be used correctly all of the time. It would be able to identify new trends and profit from expected movements on a consistent basis. Unfortunately, that's not how the real world works.

Leading indicators and lagging indicators are crucial in analyzing economic trends and making investment decisions.

Leading indicators predict future economic activity, providing foresight into where the economy might be headed. Examples include new orders for durable goods, stock market returns, and consumer sentiment. These indicators help businesses and investors make proactive decisions.

Lagging indicators, on the other hand, confirm trends that have already occurred. They reflect the economy's past performance and include metrics like unemployment rates, gross domestic product (GDP), and inflation. These indicators are useful for understanding the effectiveness of current policies or strategies but are less helpful for predicting future events.

Understanding the balance between these indicators helps in making informed decisions and timing investments effectively.