Overbuying the target of a financial transaction is called overbought, and conversely, oversold is called oversold. Before learning to identify overbought and oversold indicators, we must first have a general understanding of them. The so-called overbought and oversold index is caused by the inertia of price trend.

Overbuying and oversold (OBOS) is an analytical tool to measure the general momentum. The calculation and analysis method is simple, but it is very practical. Let's first calculate the sum of the number of stocks that have risen in N days, and then calculate the sum of the number of stocks that have fallen in these days. After subtraction, we get the OBOS value. For example, on the first day, 20 stocks rose, 10 stocks fell, and on the second day, 29 stocks rose, 1 stock fell, and the OBOS2 value was 20+29-( 1). Of course, in practical analysis, the value of n days should not be too small, and it is generally appropriate to take 10 days or so.

In the stock market, investors often react strongly to the market or individual stocks because of the spread of some news, which leads to excessive rise or fall of the stock market or individual stocks, thus resulting in the phenomenon of overbought and oversold. When investors' emotions calm down, the impact of overbought and oversold will be gradually adjusted appropriately. So after overbought, the stock price will fall for a while; There will be a considerable rebound after oversold. If investors understand this overbought and oversold phenomenon and grasp its movement law in time, they can increase their profit opportunities in the stock market.

The key here is how to measure the phenomenon of overbought and oversold in the stock market in time. There are many technical analysis methods to measure overbought and oversold, mainly including relative strength index (RSI), swing index (OSC), stochastics (KDJ) and percentage.