Trend-following indicators are the most popular type of indicators. They are good in identifying trends and giving you simple buy and sell signals.
One of the common charges against trend-following indicators is that they lag significantly after price and generate signals too late. But you don’t want an indicator to get you into trend changes too fast either, as you can then be lead into too many false signals in a noisy, vacillating market. It is encouraged that you play with the length and calculation methods of different trend indicators to find the right balance between speed/responsiveness and smoothness/reliability.
Examples for Indicators that are trend-following are the Moving Average, MACD and the Ichimoku Kinko Hyo.
| Trend Indicator | Relevance |
|---|---|
| Moving Average | Most Popular by far, the King of All Indicators |
| MACD | Second Most Popular, Great for Reducing Lag |
| Ichimoku Kinko Hyo | Very Popular Japanese Indicator, used for centuries in manual systems, can also be profitably traded as an EA. |
