The Forex market, like other financial markets, is subject to price movements that can reach extreme levels. These levels can be the result of significant buying or selling of an asset, resulting in overbought or oversold conditions. Understanding these states is important for successful trading as they often signal an impending trend change or correction. Overbought is a condition in which an asset (currency or other financial instrument) in the Forex market has shown a significant increase in price over a short period of time, and market participants believe that its value is overvalued. In such a situation, the market is expected to correct as buyers have exhausted their resources and the price is likely to decline. Oversold, on the other hand, describes a situation where an asset has lost most of its value in a short period of time and the market considers it undervalued. In such cases, the price is usually expected to start rising as sellers have exhausted their resources. While conditions can serve as important indicators for decision making, they do not always guarantee an immediate trend reversal. Price can remain in any of these zones for a long time, especially in a strong trend. For example, in a bull market, an asset can remain overbought for days or even weeks. Overbought and oversold are key market conditions that can help determine when to enter and exit trades. Understanding oscillators such as RSI, stochastic oscillators, and CCI warns of possible trend changes. However, successful trading depends on comprehensive market analysis, sound risk management and the use of additional tools. Understanding when an asset is overbought or oversold can greatly improve trading results, but you should always remember to diversify your data sources for decision making. No matter how strong the indicator signal is, it is always important to use stop losses. This helps protect capital if the market continues to move against your position. Oscillators are a useful tool, but relying on them alone is risky. Combine signals with other analysis methods such as volume analysis, support and resistance levels, trend lines or fundamentals. Before each trade, calculate how much potential reward you can get compared to the risk. For example, if you are risking $1, try to set your profit target at least 2-3 times higher. Traders should remember that overbought and oversold conditions do not guarantee an immediate price reversal, and that markets can remain in these states for a long time. Therefore, an important aspect of successful trading is the combination of these signals with other methods of analysis and the application of a clear risk management system. This will not only increase the chances of profit, but also minimize potential losses in a highly volatile Forex market.