Stock of the Day: Do Overbought Conditions Mean Builders FirstSource Is About To Reverse?
Stock of the Day: Do Overbought Conditions Mean Builders FirstSource Is About To Reverse?
But traders need to exercise caution. There are dozens if not hundreds of tools that are used to measure momentum. These are called momentum indicators and are different ways of measuring the same thing.Momentum refers to how far a stock's price has moved in a given time. For the most part, stocks stay within their average or typical range. If the price exceeds this range, the stock is considered to be overbought.
動量是指股票價格在給定時間內的波動程度。大部分股票都在其平均或典型範圍內波動。如果價格超出了這個範圍，該股票就被認爲是超買的。
Three popular momentum indicators on the following chart show that shares of Builders FirstSource, Inc. (NYSE:BLDR) are overbought. This is why it's our Stock of the Day.
以下圖表上顯示的三個熱門動量指標顯示Builders FirstSource, Inc. (NYSE:BLDR)的股票已超買。這就是爲什麼它是我們每日股票推薦的原因。
It's important to know when a stock is overbought. These stocks tend to reverse and move lower.
了解何時股票已超買很重要。這些股票往往會出現反轉並下跌。
But traders need to exercise caution. There are dozens if not hundreds of tools that are used to measure momentum. These are called momentum indicators and are different ways of measuring the same thing.
但交易者需要小心。有數十個甚至上百個用於衡量動量的工具。這些工具被稱爲動量指標，是衡量同一內容的不同方法。
Many successful traders use a limited number of these indicators. They get comfortable with just three or four and master them.
許多成功的交易者只使用有限數量的這些指標。他們只使用三個或四個指標，並熟練掌握它們。
Many newer traders think more is better. They look at too many indicators and end up confused and overwhelmed with information.
許多新手交易者認爲越多越好。他們看太多的指標，最後陷入困惑和信息過載。
In the following chart, there are three indicators that all show Builders FirstSource to be overbought.
在下面的圖表中，有三個指標都表明Builders FirstSource的股票已超買。
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The red line on the price chart is a Bollinger Band. It is two standard deviations above the 20-day moving average. Statistics and probability theory suggest that 95% of all trading should be within two standard deviations of the mean.
價格圖上的紅線是一個布林帶。它是20日移動平均線的兩個標準差的上限。統計和概率理論表明，所有交易中有95%應處於均值的兩個標準差之內。
If the price exceeds this threshold, like it has, the stock is considered overbought. This could draw sellers into the market.
如果價格超過這個閾值，就像現在這樣，股票被認爲是超買狀態。這可能會吸引賣家進入市場。
On the bottom half of the chart, the indicator on the top is the Relative Strength Index (RSI). When the blue line exceeds the horizontal red line, it indicates overbought conditions. As you can see, that is the case now.
在圖表的下半部分，頂部的指標是相對強弱指數（RSI）。當藍線超過水平的紅線時，表示超買條件。正如你所看到的，現在就是這種情況。
The bottom part of the lower half of the chart is the Commodity Channel Index (CCI). This is another simple yet effective indicator. It too indicates overbought conditions.
圖表的下半部分底部是商品通道指數（CCI）。這是另一個簡單但有效的指標。它也表示超買條件。
Many trading strategies and based on the concept of reversion to the mean. If a stock is overbought it will draw sellers into the market.
許多交易策略都基於回歸到均值的概念。如果股票超買，它會吸引賣家進入市場。
They will be expecting a reversal or move lower and selling could cause it to happen. This could be the case with shares of Builders FirstSource.
他們將期望發生逆轉或下跌，並且賣出可能導致這種情況發生。這可能是Builders FirstSource股票的情況。
Photo: Shutterstock
Photo: shutterstock