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Mean Reversion

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Mean reversion is based on the assumption that price will always return (revert) to a mean (Moving Average)

Here's what it means and how to trade it...

This subject and many others are covered in more detail in the FREE Forex Guide available at Forex Useful - http://forexuseful.com/new/members/21812-forex-guide/

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Mean Reversion

  1. 1. Mean Reversion Mean reversion is based on the assumption that price will always return (revert) to a mean (Moving Average) Here's what it means and how to trade it...
  2. 2. Price reverts to the Mean, cuts through it and RISES above it Price then once again.... Reverts to the Mean, cuts through it, and... FALLS below it Mean Reversion Characteristics
  3. 3. 10 MA 30 MA 50 MA Price • All Currency pairs • All time frames • All Moving Averages (MAs) Mean Reversion Applies To...
  4. 4. The longer (in value) the Moving average (mean)... The more price will be able to extend away from the mean and thus, the longer it will take for price to revert back to the mean10 MA 30 MA 50 MA Price The higher the time frame the longer it will take price to extend from and revert back to the mean (Moving average) A Note On Time Frames
  5. 5. Produced by Mean Reversion is as close as we get to a known certainty in the world of Forex trading Mean Reversion

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