Mean reversion time

Several of the mean reversion based systems are signaling a rally is around the corner. How to trade such a move depends on your methodology and instrument selection. There are large number of market followers who use mean reversion based systems. Almost all these systems triggered a buy end of last week.

If you want to study and develop mean reversion based system, the best book on it is Trade Like a Hedge Fund: 20 Successful Uncorrelated Strategies & Techniques to Winning Profits by James Altucher. The book has many system based on the principle of mean reversion. After reading it you will also realize why most funds do not have spectacular returns by following inherently low expectancy systems like those advocated by the book.



There are many ways to make money in stock market. Mean reversion is one of them. Personally I do not trade these systems but keep a close eye on them and track their performance and signals to get good idea on short term market direction.