Leader and Laggard in the Stock Market
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Today we are going to learn a topic that is closely related to the stock market.
I will be discussing the topic of leader and laggard in the stock market.
If you follow the daily live sessions by Mahersaham on Facebook and YouTube, you will certainly hear the terms leader and laggard frequently when learning about indicators.
"This is a leading indicator"
"MA is a lagging indicator"
So what do these two terms actually mean?
What does leader mean in the stock market?
It refers to the stock or counter that leads the way within a particular sector.
There are several sectors in the Bursa Malaysia stock market, including:
For example, let us say you want to analyse the property sector today.
There are many counters within each sector.
The counter that leads within that sector is called the leader.
What is a laggard?
In the stock market, it refers to the group of stocks or counters that are trailing slightly behind.
Simply put, leader and laggard are two opposing concepts.
Now that you understand the meaning, let us learn how to identify them.
There are several methods to identify leaders and laggards:
You can choose whichever method you are most comfortable with.
Some prefer using market cap.
Others favour PE ratio.
Identifying through price movement also works.
The choice is entirely yours.
A leader has the largest market cap.
Conversely, a laggard has a smaller market cap.
Let us open the website malaysiastock.biz for more details.
Once you are on the website, click stock quote.
Next, filter the sector and subsector you wish to analyse.
For example, I searched for the property sector.
After that, a display like the one below will appear.
This image shows some of the counters in the property sector.
There are many more — you can visit the website for the full list.
Notice the market cap column in the image?
The red box highlights some of the highest market cap values for the companies listed.
It does not have to be just one counter — there can be several leader counters.
To find the PE ratio, go to malaysiastock.biz, then click stock quote and filter the stock sector you wish to analyse.
Similar to market cap, a display like the one below will appear.
A high PE ratio indicates a leader counter.
You can open the TradingView website, click the chart section, and search for the counter you wish to analyse.
Then click the icon as shown in the red box below.
After that, add the counters you are interested in.
Your chart will then look something like the one below.
Based on the image above, A, B, C, and D are the counters I selected.
You can see that Counter A''s share price increased by 359.52%.
Counter B increased by 261.17%.
Meanwhile, Counter C and Counter D rose by 165.17% and 30.92% respectively.
Leader and laggard is one of the key concepts to consider before buying or selling stocks.
It helps traders identify which counters or stocks are currently leading the pack or trailing slightly behind.
That is why it is important to acquire knowledge before trading on Bursa Malaysia.
This is the best approach for you to become familiar with the ins and outs of the stock market on Bursa Malaysia.
It is especially suitable for those who wish to start investing in the stock market.
A leader refers to a stock or counter that leads the upward movement in a particular sector, while a laggard is a stock that moves slowly or trails behind compared to other stocks in the same sector.
Leader stocks can be identified through consistent price appreciation, high trading volume, and strong company fundamentals. They are usually the first counters to move when a sector starts trending.
Yes, laggard stocks can deliver profits because they have the potential to catch up with the leader''s movement. When investors start paying attention to the sector, laggard stocks typically follow the sector''s momentum upward.
Understanding this concept helps traders make more accurate decisions — whether to buy a leader stock that has already moved or to wait for an opportunity from a laggard stock that has not yet risen but has the potential to follow the sector trend.
Leader and laggard is an essential concept that helps traders identify counters with potential. With the right knowledge, you can make smarter investment decisions on Bursa Malaysia.
Want to start learning and investing? Open a CDS account with Mahersaham today and download the free stock ebook for your beginner''s guide to investing.