Indicators are items (data, reports, etc.) that give a trader information regarding the performance of everything from the overall economy to individual companies. Indicators can also be sub-divided by analysis type (fundamental vs. technical).
There are several key considerations that traders must make in order to effectively utilize the indicators that they are following. First, indicators need to be incorporated into an overall trading strategy; they do not need to be THE strategy. Like many items within the financial markets, indicators provide a great deal of information on a specific topic, but they very rarely tell the whole story by themselves. Thus, it is prudent to incorporate their use into an overall trading strategy. Second, the indicators selected must relevant to the strategy that is being implemented. If irrelevant indicators are incorporated into the strategy, at best they will cause confusion and at worst lead to a poor trading decision. Finally, traders need to fully understand the indicators they have selected. Knowing how to glean important pieces of data from large reports could be the difference between a blockbuster trade and no trade at all.