If you want to capitalize on momentum, you've got to understand the relative strength index (RSI) and how to tell the difference between a stock or other security that is overbought versus one that is oversold. Momentum traders want to buy stocks with positive momentum and sell (or short) stocks with negative momentum.
In this lesson, JC gives you the only 2 questions you need to worry about when it comess to assessing the momentum of a potential trade.
And he breaks down a couple of examples from history, including one where the unpopular few spotted weakness in Apple stock (AAPL), despite the fact that the price of the stock was ripping up and to the right.
Fortunately for those that understood the shift in momentum, they were able to limit losses and lock in profits, while the popular many lost their shirt when the chart Apple shares came tumbling down.