BALTIMORE ( Stockpickr) -- When you're looking for trades to make in this volatile market, think "extreme."
Stocks trading at price extremes -- either overbought or oversold -- can offer investors outsized risk/reward tradeoffs. They can also create trading opportunities in markets that aren't offering much direction right now. But to find trades in overbought or oversold stocks, it's crucial to know what you're looking at.
For starters, when we talk about overbought or oversold, we're not talking about a company being over or undervalued. Instead, we're talking about price extremes in a stock's momentum. Overbought doesn't mean that a stock costs "too much" -- only that it has accelerated more quickly than the market typically allows.
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