Is The Way We Look At “Overbought” And “Oversold” Right?
Probably since the day the markets opened people have been talking about them being either “overbought” or “undersold”. To be sure, only one of the two terms has any credibility and that is oversold. There is one case for this, and that is when the market is trading at zero. Undeniably that would be an oversold market! Unfortunately, for those who wish to use the term “overbought”, it is important to note that the market has unlimited upside potential. So this case can never really occur. That should show you why there is no way a market can be truly overbought. A lot of types of investing programs try to tell you the opposite.
I suppose people mean some kind of relative term when they speak in this way. In this manner, “overbought” translates to the market is high (higher than it was before). Conversely when they say oversold, they mean that the market is lower than before and they think the market will go higher. That is the reasoning why I find the need to insist that I and others why agree to start using a more appropriate termonology. It really actually makes me quite excited to talk about. A revolutionary new concept. From now on I will advocate the use of the words almost to the opposite of the current lexicon being “underbought” and “undersold”. They get tossed around a fair bit places like eminiforecaster.
Check out our reviews:
FAP Turbo Review
Forex Megadroid Review
Forex Autopilot Review
What is it to be “Underbought”? All that this means is that the market has not gone up as much as it will in the future. This means “undersold” occurs when the market has not declined enough to be where it will be at in the future. It’s easy to see when you think about it how theses terms can replace and be a more appropriate alternative to “overbought” and “oversold”.
My goal is to move people away from looking back at the past to display where markets will go in the future. Let’s get over it and move on. In my experience the best traders are the ones that look at the value of a company now, and where it will be in the future as opposed to lamenting the past. They trade developing trends in the markets. They are forward looking investors.
Related Posts
