A leading indicator is an economic indicator that helps traders to predict imminent changes in a market. Types of leading indicators include various indices, earnings reports, and economic summaries. Because leading indicators usually change before an economy changes, traders use them as predictors of the economy and take advantage of price events before they occur.
Leading indicators are not always accurate and in some cases, they cannot be sure-fire predictions of future events. However, these data can help provide information about the future health of an economy and can be used as a guideline to investment.