Glossary Term

Leading Indicator

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Leading indicators are indicators that pick up trend changes which precede changes in the broader economy. In other words, they are predictive to a certain degree because they register some change in a wider trend before that change is felt elsewhere. A great example of a leading indicator in fundamental analysis is the purchasing managers index (PMI). Purchasing managers have access to information on capital flows that ultimately increase a nation’s productivity and are later felt as either rises or drops in GDP.

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What is a Leading Indicator? A Traders Expert explanation

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