Mean reversion is one of the most powerful concepts in quantitative trading. The strategy assumes prices return to historical averages after extreme moves — creating systematic opportunities for disciplined traders.
How Mean Reversion Works
When an asset deviates significantly from its moving average, mean reversion traders take the opposite position. Key indicators include Bollinger Bands, RSI, and z-score analysis.
Risk Management Is Critical
Strict stop losses and position sizing are non-negotiable. Follow AliumNews for more algorithmic trading insights.